Health care wastes up to $850 billion a year
Proposed reforms could be paid for by fixing inefficiencies, report claims
Public option makes a comeback
Oct. 26: After members of both political parties had declared the idea of government-backed health insurance dead, Senate Majority Leader Harry Reid said Monday the Senate's version of a health care bill will include a "public option" component. NBC's Kelly O'Donnell reports.
Senate health bill to include opt-out public option
Reid backs ‘opt out’ public option
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updated 8:56 a.m. PT, Mon., Oct . 26, 2009
WASHINGTON - The U.S. health care system is just as wasteful as President Barack Obama says it is, and proposed reforms could be paid for by fixing some of the most obvious inefficiencies, preventing mistakes and fighting fraud, according to a Thomson Reuters report released on Monday.
The U.S. health care system wastes between $505 billion and $850 billion every year, the report from Robert Kelley, vice president of health care analytics at Thomson Reuters, found.
"America's health care system is indeed hemorrhaging billions of dollars, and the opportunities to slow the fiscal bleeding are substantial," the report reads.
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"The bad news is that an estimated $700 billion is wasted annually. That's one-third of the nation's health care bill," Kelley said in a statement.
"The good news is that by attacking waste we can reduce health care costs without adversely affecting the quality of care or access to care."
One example — a paper-based system that discourages sharing of medical records accounts for 6 percent of annual overspending.
"It is waste when caregivers duplicate tests because results recorded in a patient's record with one provider are not available to another or when medical staff provides inappropriate treatment because relevant history of previous treatment cannot be accessed," the report reads.
Some other findings in the report from Thomson Reuters, the parent company of Reuters:
* Unnecessary care such as the overuse of antibiotics and lab tests to protect against malpractice exposure makes up 37 percent of health care waste or $200 to $300 billion a year.
* Fraud makes up 22 percent of health care waste, or up to $200 billion a year in fraudulent Medicare claims, kickbacks for referrals for unnecessary services and other scams.
* Administrative inefficiency and redundant paperwork account for 18 percent of health care waste.
* Medical mistakes account for $50 billion to $100 billion in unnecessary spending each year, or 11 percent of the total.
* Preventable conditions such as uncontrolled diabetes cost $30 billion to $50 billion a year.
"The average U.S. hospital spends one-quarter of its budget on billing and administration, nearly twice the average in Canada," reads the report, citing dozens of other research papers.
"American physicians spend nearly eight hours per week on paperwork and employ 1.66 clerical workers per doctor, far more than in Canada," it says, quoting a 2003 New England Journal of Medicine paper by Harvard University researcher Dr. Steffie Woolhandler.
Yet primary care doctors are lacking, forcing wasteful use of emergency rooms, for instance, the report reads.
All this could help explain why Americans spend more per capita and the highest percentage of GDP on health care than any other OECD country, yet has an unhealthier population with more diabetes, obesity and heart disease and higher rates of neonatal deaths than other developed nations.
Democratic Senator Charles Schumer said on Sunday that Senate Democratic leaders are close to securing enough votes to pass legislation to start reform of the country's $2.5 trillion health care system.