The Hidden $935 Billion Problem in U.S. Health Care No One Is Talking Aboutand How to Solve It

America’s Most Expensive Health Care Problem Is Not What You Think

When people talk about the cost of U.S. health care, the usual suspects show up quickly: expensive drugs, hospital bills that look like phone numbers, surprise charges, insurance premiums, and the occasional $80 bandage that apparently graduated from business school. Those problems are real. But behind them sits a bigger, quieter issue: waste.

A widely cited analysis in JAMA estimated that waste in the U.S. health care system costs between $760 billion and $935 billion every year. That is not a rounding error. That is an economy-sized sinkhole. It represents money spent on activities that do not meaningfully improve patient health, and in some cases, make care more confusing, delayed, expensive, or even harmful.

The hidden $935 billion problem in U.S. health care is not one villain wearing a cape made of claim forms. It is a system problem. It hides in duplicated tests, avoidable infections, unnecessary scans, billing complexity, overpriced services, prior authorization battles, missed prevention, fragmented records, and incentives that reward volume more than value.

What Counts as Health Care Waste?

Health care waste is spending that could be reduced or eliminated without lowering the quality of care. In plain English, it is money that leaves patients, employers, taxpayers, and public programs without giving enough health back in return.

Researchers commonly divide U.S. health care waste into six major categories:

• Administrative complexity: billing, coding, insurance rules, claim denials, prior authorization, and paperwork that consume time without directly treating patients.
• Pricing failure: prices that are higher than necessary or wildly inconsistent for the same service.
• Failure of care delivery: preventable complications, medical errors, hospital-acquired infections, and poor quality care.
• Failure of care coordination: duplicated tests, poor handoffs, avoidable readmissions, and patients falling through the cracks.
• Overtreatment and low-value care: tests, procedures, or medications that provide little benefit for the patient’s situation.
• Fraud and abuse: false billing, improper payments, kickbacks, and schemes that drain public and private health dollars.

The important point is that waste does not always look wasteful in the moment. A duplicated blood test may seem harmless. A “just to be safe” scan may feel responsible. A 14-page insurance form may look like normal business. But multiplied across millions of patients, thousands of hospitals, and countless transactions, small leaks become a financial flood.

Why No One Talks About It Enough

The waste problem is uncomfortable because someone’s waste is often someone else’s revenue. A denied claim creates administrative work. A repeated test generates a bill. A poorly coordinated discharge can lead to a readmission. A confusing price system can benefit organizations that know how to negotiate better than patients do.

That does not mean everyone in health care is acting in bad faith. Most clinicians, nurses, pharmacists, administrators, and support staff are trying to help people in a system that often makes helping people harder than it needs to be. The problem is the machinery around them. It is a maze where everyone is running, many are exhausted, and the exit signs are printed in 8-point font.

Patients feel the result through higher premiums, deductibles, copays, taxes, and medical bills. Employers feel it through rising benefit costs. Clinicians feel it through burnout. Hospitals and practices feel it through staffing pressure and compliance burdens. The country feels it when health spending crowds out wages, public budgets, and investments in prevention.

The Biggest Buckets of Waste in U.S. Health Care

1. Administrative Complexity: The Paperwork Octopus

Administrative complexity is one of the largest sources of health care waste. The U.S. system has multiple payers, benefit designs, networks, billing codes, authorization rules, appeal processes, and documentation requirements. Every variation creates work.

A doctor may know a patient needs a medication, but the office still has to prove it to an insurer. A hospital may provide care, but then must code, submit, correct, appeal, and resubmit claims. Patients may receive a bill from the hospital, another from the physician group, another from the lab, and another from someone they never met but who apparently entered the room spiritually.

This complexity requires armies of billing specialists, coders, utilization reviewers, call-center staff, and consultants. Some administrative work is necessary. Patients need privacy protections, quality checks, fraud controls, and accurate records. But much of the current system is friction dressed as process.

2. Pricing Failure: Same Care, Different Universe

In many parts of U.S. health care, prices are not simply high; they are inconsistent. The same imaging test, procedure, or medication can cost dramatically different amounts depending on location, insurance contract, facility ownership, and site of care.

Patients are often told to behave like consumers, but health care is not like buying a toaster. If you need emergency surgery, you are not comparing five-star reviews while bleeding. Even for planned care, prices are hard to understand, quality is difficult to compare, and the person choosing the service is often not the person paying the full bill.

Pricing failure is not solved by transparency alone, but transparency is a start. Employers, public programs, and patients need usable price information, not mystery PDFs buried on hospital websites like treasure maps written by lawyers.

3. Low-Value Care: More Is Not Always Better

Low-value care includes tests and treatments that are unlikely to help a specific patient. Examples may include antibiotics for viral infections, imaging for uncomplicated low back pain without warning signs, routine preoperative testing for very low-risk procedures, or repeated labs that do not change treatment decisions.

The phrase “low-value care” can sound cold, but the goal is not to deny care. The goal is to provide the right care. Unnecessary treatment can cause false positives, side effects, anxiety, follow-up procedures, and cost. Sometimes the safest scan is the one you do not need.

Campaigns such as Choosing Wisely helped popularize a simple but powerful idea: patients and clinicians should talk openly about whether a test or treatment is truly necessary. That conversation can protect both health and wallets.

4. Poor Coordination: The Left Hand Needs the Chart

U.S. health care often acts less like one system and more like several systems wearing the same lab coat. A patient may see a primary care doctor, specialist, hospitalist, pharmacist, physical therapist, home health nurse, and insurereach with different records, incentives, and workflows.

When coordination fails, patients repeat their story again and again. Medication lists become outdated. Test results fail to arrive. Specialists may not know what primary care already tried. Hospitals discharge patients without enough follow-up support. The result is duplicated work, preventable complications, and avoidable readmissions.

5. Preventable Harm: The Most Painful Kind of Waste

Some waste is measured in dollars. Some is measured in suffering. Hospital-acquired infections, medication errors, falls, pressure injuries, and avoidable complications can create enormous costs while harming patients who entered the system seeking help.

Patient-safety investments are not “nice to have.” They are financial strategy, quality strategy, and moral obligation in one package. Better infection control, medication reconciliation, checklists, staffing support, and safety culture can prevent harm before it becomes a crisis.

6. Fraud and Abuse: The Drain Everyone Pays For

Fraud is not the biggest category of waste, but it is one of the most infuriating. False claims, unnecessary durable medical equipment, kickbacks, upcoding, and improper payments steal resources from patients and taxpayers.

Fighting fraud requires smarter oversight, better data analytics, stronger enforcement, and faster detection. But fraud prevention must also be precise. A system that treats every honest patient like a suspect creates another kind of waste: delay.

The Human Cost of a $935 Billion Leak

Waste is not just a policy term. It shows up in ordinary life. A parent delays care because the deductible is too high. A small business drops a richer health plan because premiums keep climbing. A doctor spends lunch completing insurance forms instead of calling a worried patient. A nurse handles the fallout when a preventable complication extends a hospital stay.

The U.S. spends more on health care than any other wealthy country, yet many Americans still struggle with access, affordability, and outcomes. That combination should make everyone pause. If spending more automatically produced better health, America would be the Olympic champion of wellness. Instead, the country often pays gold-medal prices for bronze-medal convenience.

How to Solve the Hidden $935 Billion Problem

1. Simplify Administration Without Weakening Accountability

The U.S. should standardize core administrative processes across payers: eligibility checks, prior authorization rules, claim submission, denial codes, appeals, and quality reporting. Electronic prior authorization can help, but only if it reduces unnecessary approvals rather than turning fax-machine frustration into digital frustration.

High-performing clinicians and organizations should qualify for “gold card” programs that reduce prior authorization requirements when they consistently follow evidence-based care. Insurers should publish denial rates, appeal outcomes, and approval timelines. If a rule delays needed care, the burden should be on the rule-maker to prove its value.

2. Pay for Value, Not Volume

Fee-for-service payment rewards activity. Value-based care rewards outcomes, prevention, coordination, and appropriate use. Accountable Care Organizations, bundled payments, advanced primary care models, and shared-savings programs can encourage providers to keep people healthier instead of simply billing more visits and procedures.

Value-based care is not magic. Poorly designed models can create new paperwork or incentives to avoid sick patients. The best models include strong quality measures, risk adjustment, patient protections, health equity goals, and enough flexibility for clinicians to solve real problems.

3. Invest in Primary Care and Prevention

Primary care is the front door of a better system. When patients have timely access to trusted primary care, chronic conditions are managed earlier, medication problems are caught sooner, and unnecessary emergency visits can be avoided.

Prevention does not mean lecturing patients to eat kale while ignoring food prices, housing instability, transportation, and mental health. It means building practical support around people’s lives: blood pressure control, diabetes management, vaccines, smoking cessation, behavioral health integration, nutrition support, and community-based care.

4. Cut Low-Value Care With Better Conversations

Reducing low-value care should not feel like rationing. It should feel like clarity. Patients deserve to know: What are my options? What happens if I wait? What are the risks? How much will this cost? Is this test likely to change my treatment?

Clinicians need decision-support tools that are useful at the point of care, not pop-up alerts that appear like caffeinated mosquitoes. Health systems should track low-value services, give clinicians feedback, and redesign defaults so evidence-based care is the easiest path.

5. Make Prices Usable, Not Just Technically Public

Price transparency should move from compliance theater to practical decision-making. Patients, employers, and purchasers need clear, comparable, upfront prices for shoppable services. Plans and providers should make cost estimates understandable before care, not six weeks later when the bill arrives like a jump scare.

Policymakers can also examine site-neutral payments where appropriate, reference pricing, stronger competition policy, and limits on anti-competitive contracting. The goal is not to underpay for care. The goal is to stop rewarding opacity.

6. Make Health Data Follow the Patient

Interoperability is not a tech buzzword; it is a safety issue. When records do not move, patients become the courier service for their own medical history. That leads to repeated tests, medication errors, and slower decisions.

Modern application programming interfaces, stronger enforcement against information blocking, and better patient access to records can reduce waste. But technology must serve care teams, not bury them under more clicks.

7. Fight Fraud With Data and Due Process

Fraud detection should use advanced analytics to identify unusual billing patterns, suspicious provider behavior, and improper payments earlier. Public programs should recover misspent funds and remove bad actors from participation.

At the same time, fraud controls should be targeted. Overly broad restrictions can punish patients with legitimate needs and providers who are already drowning in paperwork. Smart enforcement separates criminals from clinicians.

A Practical Playbook for Real Change

For Health Systems

Start with a waste audit. Identify duplicated tests, avoidable readmissions, preventable infections, claim denial patterns, unnecessary variation in care, and administrative bottlenecks. Then redesign workflows around the patient journey rather than departmental convenience.

For Insurers

Reduce prior authorization for high-value, evidence-based care. Standardize requirements. Share real-time benefit information. Explain denials clearly. Reward providers who deliver appropriate care instead of forcing every patient through the same maze.

For Employers

Use claims data to identify low-value spending, high-price facilities, and preventable emergency use. Offer navigation support, second-opinion programs, direct primary care options, and centers of excellence for complex procedures.

For Policymakers

Push administrative simplification, enforce interoperability rules, strengthen price transparency, support primary care, fund patient safety, modernize fraud detection, and align payment with outcomes. Most importantly, measure whether reforms reduce total cost without harming access or quality.

For Patients

Patients should not be expected to fix a trillion-dollar system alone. Still, a few questions can help: Do I really need this test? Are there safer or cheaper options? What will this cost in my plan? What happens if we monitor first? Can my records be shared with my other doctor?

The Big Warning: Do Not Confuse Waste Reduction With Care Denial

There is a dangerous shortcut in health care reform: call something “waste” and then simply cut it. That approach can hurt patients. Real waste reduction means removing services that do not help while protecting care that does.

A prior authorization denial that blocks a needed medication is not waste reduction. A staffing cut that increases infections is not efficiency. A narrow network that makes patients wait months for care is not value. The goal is better care for less money, not worse care with a prettier spreadsheet.

Experience-Based Perspective: What This Problem Feels Like on the Ground

To understand the hidden $935 billion problem, imagine a common patient journey. A middle-aged worker develops persistent knee pain. Nothing dramaticjust enough pain to make stairs feel personal. The patient calls a primary care office and waits two weeks for an appointment. The doctor recommends physical therapy, weight management support, anti-inflammatory strategies, and an X-ray only if symptoms suggest something more serious.

Then the system begins doing what the system does best: creating side quests. The physical therapy office needs insurance approval. The insurer requests documentation. The clinic sends notes. The insurer says the notes are incomplete. The clinic resends them. The patient calls three times, waits on hold, and learns a new appreciation for elevator music. Meanwhile, the knee still hurts.

Eventually, the patient sees a specialist. Because the earlier records did not transfer cleanly, the specialist repeats part of the history and orders imaging “to be safe.” The scan shows mild arthritis, which is not surprising. The bill arrives in separate pieces: facility fee, radiology fee, clinician fee, and a mysterious adjustment that makes the patient wonder whether math has joined a secret society.

Nothing about this story requires fraud or incompetence. Everyone may be doing their job. The primary care doctor is trying to follow evidence. The specialist is trying to avoid missing something. The insurer is trying to manage utilization. The billing department is trying to get paid. The patient is trying to walk without sounding like a haunted staircase.

Yet the journey contains waste: authorization friction, delayed conservative treatment, repeated information collection, imaging that may not change care, confusing billing, and time lost by staff and patient alike. Multiply that by millions of ordinary episodesback pain, diabetes follow-ups, medication changes, referrals, hospital dischargesand the $935 billion estimate becomes easier to believe.

The solution in this example is not complicated in theory. Give primary care faster access. Make physical therapy easy to start when evidence supports it. Use clear criteria for imaging. Share records automatically. Provide upfront cost estimates. Use one bill that normal humans can understand. Track outcomes, not just visits. Reward the team when the patient improves without unnecessary spending.

In real life, the best health care experiences often feel surprisingly simple. The patient gets the right appointment quickly. The clinician has the records. The medication list is accurate. The next step is clear. The cost is explained. Follow-up happens before the problem becomes an emergency. No one asks the patient to fax anything, because it is not 1998 and the fax machine has had enough glory.

That is what waste reduction should feel like: less confusion, fewer delays, safer care, clearer prices, better outcomes, and more time for the human parts of medicine. The hidden $935 billion problem is not just that America spends too much. It is that too much spending buys frustration instead of health.

Conclusion: The Money Is ThereIt Is Just in the Wrong Places

The U.S. health care system does not lack money. It lacks alignment. A system that spends trillions of dollars should not leave patients confused, clinicians burned out, employers squeezed, and public programs under pressure. The hidden $935 billion problem proves that the country can improve affordability without simply cutting needed care.

The path forward is clear: simplify administration, reduce low-value care, make pricing usable, strengthen primary care, improve coordination, prevent harm, fight fraud, and pay for outcomes. None of these steps is easy. But neither is continuing to fund a system where waste hides in plain sight.

Solving health care waste will not make American medicine perfect overnight. But it can make it more honest, more efficient, and more humane. And in a system this expensive, humane efficiency is not a luxury. It is the prescription we should have filled years ago.

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