Skip to content
Tech News
← Back to articles

US commercial insurers pay 254% of Medicare for the same hospital procedures

read original get Medicare Advantage Plan → more articles
Why This Matters

This analysis highlights the significant inefficiencies in the US healthcare system, with commercial insurers paying up to 254% of Medicare rates for the same hospital procedures, contributing to the country's $3 trillion annual spending gap. Addressing these disparities and wasteful spending can lead to substantial savings and more sustainable healthcare costs for consumers and the industry alike.

Key Takeaways

The American Healthcare Conundrum

The US spends ~$14,570 per person on healthcare. Japan spends ~$5,790 and has the highest life expectancy in the OECD. That gap is roughly $3 trillion per year.

This project finds it, one issue at a time. Each issue identifies one fixable problem, quantifies the waste from primary federal data, and recommends a specific policy fix. All code is open-source. Anyone can reproduce the analysis.

Subscribe on Substack | MIT License | Contributing

Savings Identified So Far

# Issue Savings Key Finding Data Source 1 OTC Drug Overspending $0.6B/yr Medicare pays Rx prices for drugs you can buy off the shelf CMS Part D 2023 2 The Same Pill, A Different Price $25.0B/yr US pays 7-581x more than peer nations for the same drugs CMS Part D, NHS Tariff, RAND 3 The 254% Problem $73.0B/yr Commercial insurers pay 254% of Medicare for identical hospital procedures CMS HCRIS, RAND 5.1 Running Total $98.6B/yr 3.3% of the $3T gap

Published Issues

Issue #1 — Medicare's OTC Drug Problem (~$0.6B/year)

Medicare Part D pays prescription prices for drugs available cheaply over-the-counter. Step therapy reform — requiring OTC equivalents before prescription coverage activates — would redirect roughly $0.6 billion per year in unnecessary spending.

Read the full analysis → issue_01/newsletter_issue_01_FINAL.md

... continue reading