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Waste Sickens Health Care System

While health insurance premium growth is now less than half of what is was five years ago, waste in the health care system continues to be a plague that drives up costs and health insurance premiums, according to a new study from PricewaterhouseCooppers.

The new study is quite interesting as it breaks out where health insurance premium dollars go:

33% pays for physcian costs
20% pays for hospital inpatient costs
15% pays for outpatient care costs
14% pays for prescription drug costs
6% pays for plan administration, claims handling and government payments
5% pays for prescription drug costs
4% pays for preventative care, disease management, IT and marketing
3% goes to health insurance plan profits

Areas of significant increasing costs, as compared to the prior year, include physician care, hospital care, outpatient treatment and prescription drug costs. Health insurance plan profits remained flat at 3%.

Wasteful spending is on the rise and includes care that does not increase value or quality of care to patients. The study suggests that the practice of defensive medicine may be responsible for much of the growth in outpatient care costs, as doctors order tests and lab work to protect themselves from liability.

However efforts to reduce waste are also on the rise and include increasing standardization, medical liability reform, value based reimbursement and improving information technologies (IT) in the health delivery system.

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