Medical Errors Cost $19.5 Billion Per Year

The Wall Street Journal carried an article with the headline, “Study Puts Cost of Medical Errors At $19.5 Billion”, on August 9, 2010. The article is based on a study commissioned by the Society of Actuaries (SOA) and conducted by the actuarial and consulting firm Milliman. Researchers in this study used the data from insurance claims to gather their results. According to the study, medical errors and the problems they create cost the US economy $19.5 billion dollars each year.

In the study, the researchers conservatively estimate that they were able to identify 6.3 million measurable medical injuries as reported on insurance claims. Of the 6.3 million injuries, they estimate that 1.5 million were directly associated with a medical error. These errors caused more than 2,500 avoidable deaths and over 10 million lost days of work. The numbers in this study may be significantly underestimated as the researchers note that this study, “relies upon medical events which have been submitted for payment by medical providers.”

Report co-author Jonathan Shreve noted, “We used a conservative methodology and still found 1.5 million measurable medical errors occurred in 2008. This number includes only the errors that we could identify through claims data, so the total economic impact of medical errors is in fact greater than what we have reported.”

This study determined the price tag to be $19.5 billion only based on the factors of increased medical costs, costs related to an increased mortality rate, and costs related to lost productivity after the occurrence of an error. They did not count any costs related to pain and suffering, or malpractice. Of the total $19.5 billion, fully $17 billion was the increased cost of medical care rendered to those who were injured. The remainder was calculated as loss of productivity and cost related to increased mortality.

Jim Toole, the chairman of the SOA’s project oversight group summed up the impact of these numbers by noting, “This is so important, and yet it’s so overlooked,” says Toole. “We have wonderful information in this country about automobile safety and how in the last 20 years we’ve reduced highway deaths by 35% … but we have no starting point for medical errors or injuries.”

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