This archive report was first published on 7 October 2019.
Published on October 7, 2019, a study in the Journal of the American Medical Association (JAMA) shed light on the significant waste in the US healthcare system. According to the study, administrative waste costs between $231 billion and $241 billion annually, with high brand drug prices being a major contributor.
Don Berwick, a physician and senior fellow at the Institute for Healthcare Improvement, suggested that moving to a single-payer system could largely eliminate administrative complexity. However, he acknowledged that powerful stakeholders would resist such a change, citing a lack of political will as the primary obstacle to reducing waste.
While the study's lead author works for Humana, he brings experience from government and academia, making this study a significant attempt to refine previous research on healthcare waste. Ashish Jha, a co-author of an accompanying editorial, emphasized the possibility of reducing administrative waste in a system with private insurance, citing examples from Switzerland and the Netherlands.
Prices are the next largest area of waste identified by the study, with an estimated annual cost of $231 billion to $241 billion. The study points to high brand drug prices as the primary contributor, although consolidated hospital markets also contribute to higher prices.
Experts note that reducing prices could have unintended consequences, such as decreased investment and innovation in the pharmaceutical industry. Rachel Sachs, an associate professor of law at Washington University in St. Louis, cautioned that high drug prices do motivate investment and innovation, but that not all innovation is worth the price.
