Annual tab for medical errors: $19.5 billion; is that a lot?

Society of Actuaries put out a Milliman study on medical errors. It found that “measurable medical errors cost the U.S. economy $19.5 billion in 2008.” A quote:

Key findings from the study include:

  • There were 6.3 million measurable medical injuries in the U.S. in 2008; of the 6.3 million injuries, the SOA and Milliman estimate that 1.5 million were associated with a medical error.
  • The average total cost per error was approximately $13,000.
  • In an inpatient setting, seven percent of admissions are estimated to result in some type of medical injury.
  • The measurable medical errors resulted in more than 2,500 avoidable deaths and more than 10 million excess days missed from work due to short-term disability.

So is that a lot or a little? Well, medical errors sound to me a lot like malpractice, and Towers Perrin estimated U.S. medmal losses as $25.9 billion in 2008 (p. 19 of this report). The numbers are comparable, so I guess that’s saying medmal insurance is doing a good job, since it’s covering the cost of errors with an extra penalty for goofing up.

Or one could point out that total U.S. health care costs in 2008 were $2.3 trillion. Milliman’s estimate is but 0.8% of that. That sounds like a low error rate.

My gut opinion (not my actuarial opinion) would say the error rate is considerably higher, mainly because I know a couple of people who died because of medical errors and I know a few more who got bedsores, which are prima facie medical errors.

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