RELEASE: New CAP Issue Brief Looks at How to Lower Administrative Costs in America’s Health Care System

Washington, D.C. — Today, the Center for American Progress released a new issue brief looking at administrative costs in the U.S. health care system. The brief includes a summary of these costs and looks at the primary drivers of administrative spending; analyzes how administrative costs in the United States compare with other countries; and outlines the extent to which comprehensive and incremental reforms could reduce these costs and limit waste in America’s health care system. Key findings from the report include:

  • The United States currently spends $496 billion on billing and insurance-related (BIR) costs—half of which ($248 billion) are excessive.
  • The United States spends 8.3 percent of total health expenditures on administrative costs, far exceeding both countries with multipayer health systems with stricter rate regulation and those with single-payer systems.
  • About one-half of providers’ administrative costs are BIR expenses.
  • Countries all over the world employ a number of key reforms, including all-payer rate setting, global budgeting, and centralized claims processing to keep administrative spending low.

“The United States spends much more on administrative costs in health care than other developed countries,” said Emily Gee, health economist at the Center for American Progress and co-author of the brief. “This brief details how payment reforms can help rein in these costs for patients and the government.”

Please click here to read “Excess Administrative Costs Burden the U.S. Health Care System” by Emily Gee and Topher Spiro.

For more information or to speak with the author, please contact Colin Seeberger at or 202.741.6292.