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Health Policy
February 2, 2021

Reducing Administrative Waste in the US Health Care System

Author Affiliations
  • 1USC Schaeffer Center, Los Angeles, California
JAMA. 2021;325(5):427-428. doi:10.1001/jama.2020.24767

The US health care system is famous for its expense and its waste. In a 2019 study, Shrank et al1 estimated that about 25%, or $760 billion to $935 billion, of the $3.6 trillion the US spends on health care annually is potentially wasteful. This equates to each person spending an unnecessary $2500 per year on health care. The largest category of wasteful spending in the US (about 30%) is administrative costs. Eliminating administrative expense has the benefit of lowering health care costs without affecting spending on patient care. It is the safest form of health care cost savings; virtually no one argues that administrative costs should remain high. Reducing administrative waste should be the highest priority for payers and policy makers given that everyone, including patients and clinicians, would benefit from lower health care costs.

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