Abstract
[This is an excerpt.] Administrative spending accounts for about one-quarter of the nearly $4 trillion spent on health care annually in the United States, making it a natural place to look for savings. Yet despite attempts to lower such costs, they have remained stubbornly high for decades. Is it possible that all this spending is really necessary? No, it is not. For the past two years, we, along with colleagues from the consulting firm McKinsey & Company, have been examining administrative health-care costs in detail — and comparing them with similar costs in other industries. Of the roughly $1 trillion in annual health-care administrative spending, we estimated the United States could save $265 billion annually, or roughly 6 percent of total health-care spending, by applying technologies and processes proven to work already. For context, that is more than Medicare fee-for-service spent on inpatient and outpatient hospital care combined in 2019. Put another way, this would amount to $1,300 for each adult in the United States. If we achieved savings of that magnitude, we would be able to trim the health-care bills of financially stretched Americans even as we invest in behavioral health and other underfunded areas of care.[To read more, click View Resource.]
This resource is found in our Actionable Strategies for Government: Optimizing Workload & Workflows (Reduce Administrative Burden).
