Avoidable Health Spending

  • Fraud and abuse
  • Avoidable care
    • Medical errors
    • Lifestyle-related
    • Practice variations
    • Ambulatory care sensitive conditions
  • Cost-ineffective care
  • Inefficiency
    • Excess regulatory costs
    • Excess administrative costs


The Institute of Medicine analyzed health spending for 2009, showing that the U.S. health system wastes an estimated $765 billion (30% of annual health spending), including $210 billion in unnecessary services, $190 billion in paperwork/unnecessary administrative services, $130 billion on inefficiently delivered services, $75 billion on fraud, $55 billion on missed prevention opportunities.

There is substantial variation in the level of inappropriate use across different health care services. Research shows that the rates at which particular procedures, tests, and medications were performed or prescribed when clinically inappropriate ranged from a low of 1 percent to a high of 89 percent.



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