30% of the US 2½ Trillion Dollar Annual Expenditure on Health Care is Squandered, Says US Institute of Medicine. (January 7, 2013)

At the beginning of September last year the US Institute of Medicine, a member of the National Academy of Sciences, released its 450 page report Best Care at Lower Cost: The Path to Continuously Learning Heath Care in America.

On Friday, January 4, 2013 the President's Council of Advisors on Science and Technology (PCAST) had a briefing on the Institute of Medicine Study from Helen Darling, President, National Business Group on Health and Brent James, Executive Director, Institute for Health Care Delivery Research; Vice President, Medical Research and Continuing Medical Education, Intermountain Healthcare.

To view the session:

Put simply the Institute of Medicine, an independent adviser to the government and the public, found that in 2009 of the US$2.5 trillion the US spent on health care (16.2% of GDP) US$750 billion was being wasted. Were the waste reduced to 0%, heath care would drop to ~11.3% of GDP.

For a tabulation of health care cost as a percentage of GDP for 189 nations click here.

For a quick partial comparison

US = 16.2% of GDP

Finland = 11.7%

Switzerland = 11.3

Canada = 10.9%

Sweden = 9.9%

Norway = 9.7%

UK = 9.3%

Australia = 8.5%

Denmark = 7.0%

Summarising its findings the IOM wrote:

In addition to unsustainable cost growth, there is evidence that a substantial proportion of health care expenditures is wasted, leading to little improvement in health or in the quality of care. Estimates vary on waste and excess health care costs, but they are large. The IOM workshop summary The Healthcare Imperative: Lowering Costs and Improving Outcomes contains estimates of excess costs in six domains: unnecessary services, services inefficiently delivered, prices that are too high, excess administrative costs, missed prevention opportunities, and medical fraud (IOM, 2010). These estimates, presented by workshop speakers with respect to their areas of expertise and based on assumptions from limited observations, suggest the substantial contribution of each domain to excessive health care costs

The  breakdown of the wastage in US health care report (credit IOM):