Tag Archives: U.S. Health Care

Weekend Long Reads: How to Save a Quarter-Trillion Dollars in Our Healthcare System

by Kevin Schofield


Each year nearly $4 trillion is spent on health care in the United States; of that, about one-quarter, or $950 million, is spent on administrative expenses. This week’s “long read” is a report by the business consultant McKinsey & Company on how money could be saved through administrative simplification and other business process improvements.

American health care is a multi-payer (over 900 of them), largely for-profit system. The benefit of such a system is that it can drive innovation in technology and treatments, as we have seen during the COVID-19 pandemic with vaccines to reduce infections and new drugs to treat the disease. But as we all know only too well, it is a broken system in many aspects: It’s expensive, often inefficient, and far less than comprehensive. Many of the policy decisions that brought us to this point are beyond the scope of McKinsey’s study, but it doesn’t take much work to identify the inefficiency and expense derived from the overhead of having multiple payers, providers, and patients. The health care industry is also heavily regulated, which protects patients but creates additional overhead for compliance.

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