At least half of healthcare administrative spending is wasteful, report says

Administrative spending accounts for 15 to 30 percent of healthcare spending in the U.S. and at least half of that "does not contribute to health outcomes in any discernible way," according to a report published Oct. 6 in Health Affairs

Health Affairs launched the Council of Health Care Spending and Value in 2019 to study excessive health spending in the U.S. and recommend strategies to address it, according to the report. The council plans to release its recommendations later this year. The council defines excessive spending as "that which both diverges from a norm and is not commensurate with the health it produces."

Three notes:

1. Wasteful spending accounts for $285 billion to $570 billion in annual national health spending, according to the report. 

2. The report states that — according to health economist David Cutler — if Congress established a centralized claims clearinghouse, $300 million could be saved annually. That's approximately $0.06 per claim. 

3. Not all administrative spending is wasteful, according to the report, as much of it is "necessary and efficient, facilitating coordination among multiple actors and allowing for a level of choice in insurers, benefits, plans, providers and procedures."

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