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Policy Proposals

Reducing administrative costs in US health care

March 10, 2020
Doctor completing paperwork


The Problem

Administrative costs account for one-quarter to one-third of total health-care spending in the United States—far greater than the amount necessary to deliver effective health care. Excessive administrative burden results in higher costs for physicians, insurers, and patients alike.

The Proposal

Cutler proposes several reforms to the U.S. health-care system aimed at reducing administrative costs. Specifically, his proposal would establish a clearinghouse for bill submission, simplify prior authorization, harmonize quality reporting, and enhance data interoperability in the health-care system. Cutler’s proposal to lower administrative costs could save $50 billion annually.