October 11, 2022 – New research from Health Affairs finds that “between 15% to 30% of all medical spending in the US is attributable to administrative spending, which totaled between $285 million and $570 million in 2019.” The report also found that a lot of this money doesn’t contribute to patient care or health outcomes in any way.
Healthcare Finance News writes “Some of the estimates contained in the data encompass only billing- and insurance-related expenses and, as a result, are lower than those that include both billing- and insurance-related and non–billing- and insurance-related costs. But even at the lower end of estimates, U.S. spending on administrative costs annually accounts for twice the spending on care for cardiovascular disease and three times the spending for cancer care.”
In this area, the US is spending more in healthcare administration than its peers – one estimate found that the US spends $1,055 per capita on administrative costs. From the same data, the country with the next highest spending per capita is Germany at $306.
The authors of the study found that the federal government will likely need to advise on how to move things in the right direction, saying “No single intervention is likely to make a significant dent in the system’s administrative burden, and efforts to address administrative waste are only effective if they do not impose greater costs than they save.”