A Much Easier Health Care Fix

Monday, August 10, 2009


PricewaterhouseCoopers estimates that the United States wastes $1.2 trillion in health care each year, over half the $2.2 trillion total amount spent annually in the US economy. While Pricewaterhouse reported 16 distinct areas of waste, the top 6 account for nearly $500 billion.

The two largest squanderings of wealth come from overtesting and inefficient claims processing which account for $420 billion in wasteful spending. The overtesting arises from concerns of legal liability from the doctor's point-of-view resulting in the practice of "defensive medicine". Increased investment in technology could fix some of the vast inefficiencies in the hospital-insurer relationship.

If we could save just 2% of the total estimated waste in the system we could provide health insurance for everyone who legitimately needs it. As Larry Kudlow points out, there are 10-15 million people who are long-term uninsured and offering them vouchers would cost about $25 billion annually.

Instead of entirely revamping a system that is working for 80% of our citizens, we could cut a very minuscule bit of the extra fat in the system and pay for those unfortunate few that have been unable to afford the luxury of the American system.


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