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Health care system wastes $750 billion a year, report says

Posted: September 7, 2012 at 2:21 pm

WASHINGTONThe U.S. health-care system squanders $750 billion a year roughly 30 cents of every medical dollar through unneeded care, byzantine paperwork, fraud and other waste, the influential Institute of Medicine said Thursday in a report that ties directly into the presidential campaign.

President Barack Obama and Republican Mitt Romney are accusing each other of trying to slash Medicare and put seniors at risk. But the counter-intuitive finding from the report is that deep cuts are possible without rationing and a leaner system might even produce better quality.

"Health care in America presents a fundamental paradox," said the report from an 18-member panel of prominent experts, including doctors, business people, and public officials. "The past 50years have seen an explosion in biomedical knowledge, dramatic innovation in therapies and surgical procedures, and management of conditions that previously were fatal. ... Yet, American health care is falling short on basic dimensions of quality, outcomes, costs and equity."

If banking worked like health care, ATM transactions would take days, the report said. If home building were like health care, carpenters, electricians and plumbers would work from different blueprints and hardly talk to one another. If shopping were like health care, prices would not be posted and could vary widely within the same store, depending on who was paying.

How much is $750 billion? The one-year estimate of health care waste is equal to more than 10years of Medicare cuts in Obama's health care law. It's more than the Pentagon budget. It's more than enough to care for the uninsured.

Getting health care costs better controlled is one of the keys to reducing the deficit, the biggest domestic challenge facing the next president.

The report did not lay out a policy prescription for Medicare and Medicaid but suggested there's plenty of room for lawmakers to find a path.

Panel members urged a frank discussion with the public about the value Americans are getting for their health care dollars. As a model, they cited "Choosing Wisely," a campaign launched this year by nine medical societies to challenge the widespread perception that more care is better.

"It's a huge hill to climb, and we're not going to get out of this overnight," said panel chairman Dr. Mark Smith, president of the California HealthCare Foundation, a research group. "The good news is that the very common notion that quality will suffer if less money is spent is simply not true."

More than 18 months in the making, the report identified six major areas of waste. Adjusting for some overlap among the categories, the panel settled on an estimate of $750 billion annually:

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Health care system wastes $750 billion a year, report says

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