Society of Actuaries Study Finds Medical Errors Annually Cost at Least $19.5 Billion Nationwide
Society of Actuaries—August 10th, 2010
Findings from a new study released today estimate that measurable medical errors cost the U.S. economy $19.5 billion in 2008. Commissioned by the Society of Actuaries (SOA) and completed by consultants with Milliman, Inc., the report used claims data to provide an actuarially sound measurement of costs for avoidable medical injuries. Of the approximately $80 billion in costs associated with medical injuries, around 25 percent were the result of avoidable medical errors.
“This report highlights a singular opportunity for both improving the overall quality of care and reducing healthcare costs in this country,” says Jim Toole, FSA, CERA, MAAA and managing director of MBA Actuaries, Inc. “Of the $19.5 billion in total costs, approximately $17 billion was the result of providing inpatient, outpatient and prescription drug services to individuals who were affected by medical errors. While this cost is staggering, it also highlights the need to reduce errors and improve quality and efficiency in American healthcare.”
Medical errors are a significant source of lost healthcare funds every year. For example, the study found that $1.1 billion was from lost productivity due to related short-term disability claims, and $1.4 billion was lost from increased death rates among individuals who experienced medical errors. According to a recent SOA survey, which identified ways to bend the national healthcare cost curve, 87 percent of actuaries believe that reducing medical errors is an effective way to control healthcare cost trends for the commercial population, and 88 percent believe this to be true for the Medicare population.
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