Shocking Revelation: U.S. Health Care System Wastes More Money than the Entire Pentagon Budget Annually

By Dr. Joseph Mercola

A review of U.S. healthcare expenses by the Institutes of Medicine1 has revealed that 30 cents of every dollar spent on medical care is wasted, adding up to $750 billion annually.

The report identifies six major areas of waste: Unnecessary services; inefficient delivery of care; excess administrative costs; inflated prices; prevention failures; and fraud.

“Apart from the economic toll these deficiencies place, they also result in patients having to suffer needlessly. Some studies have indicated that in 2005, about 75,000 deaths could have been averted if each state had delivered healthcare at the quality and efficiency levels of the best performing state,” Medical News Today reports.2

According to The Washington Times:3

“‘Health care in America presents a fundamental paradox,’ says the report from an 18-member panel of prominent specialists, including doctors, business people and public officials. ‘The past 50 years have seen an explosion in biomedical knowledge, dramatic innovation in therapies and surgical procedures, and management of conditions that previously were fatal…

Yet, American health care is falling short on basic dimensions of quality, outcomes, costs and equity.’

…If banking worked like health care, ATM transactions would take days, the report says. If home building were like health care, carpenters, electricians and plumbers would work from different blueprints and hardly talk to each other.

If shopping were like health care, prices would not be posted and could vary widely within the same store, depending on who was paying. If airline travel were like health care, pilots would be free to design their own preflight safety checks – or not perform one at all.”

America’s Health Care System Must Transform

That the health care system in the United States is hopelessly inadequate and ineffective is obvious. Statistics place the U.S. health care system among the top threeleading causes of death in the U.S. – an irony that never ceases to amaze me…

Furthermore, Americans spend more on health care than citizens of any other country, up to 1.5 times more per person, yet we rank 50th in life expectancy and 47thin infant mortality. These are absolutely dismal outcomes from the most expensive health care system in the world!

According to Medical News Today:4

“The Committee said that aiming for just incremental upgrades and alterations carried out by individual hospitals or health care providers will have little impact on improving the nation’s overall health care service…

The only way the USA’s healthcare system can really improve is to transform it into a learning system that continuously improves itself by ‘systematically capturing and broadly disseminating lessons from every care experience and new research discovery…’

The report urges insurance providers, professional societies, researchers, and health economists to work together to find ways of measuring quality performance and to design new payment models and incentives that reward quality rather than volume.”

That would be a good start. But we cannot ignore the all-pervasive influence of the pharmaceutical industry on our health care system. Conflicts of interest that affect not only the quality but also the cost of care are rampant throughout the entire system, starting with our medical education. Doctors today are trained to prescribe drugs and to treat symptoms, and are taught virtually nothing about nutrition and fitness, which are cornerstones for good health. Ultimately, if we want to improve the health care system, we must address the blind reliance on drugs as the number one strategy for disease prevention and treatment.

Medicare Bill “Upcoding” Costs Taxpayers

In related news, an investigation conducted by the Center for Public Integrity found “upcoding” Medicare bills cost taxpayers about $1.1 billion annually.

“Between 2001 and 2010, doctors increasingly moved to higher-paying codes for billing Medicare for office visits while cutting back on lower-paying ones, according to a year-long examination of about 362 million claims. In 2001, the two highest codes were listed on about 25 percent of the doctor-visit claims; in 2010, they were on 40 percent. Similarly, hospitals sharply stepped up the use of the highest codes for emergency room visits while cutting back on the lowest codes,” The Washington Postreports.5

However, while Medicare fraud is becoming increasingly common, it’s worth noting that the pharmaceutical industry as a whole is thebiggest defrauder of all.6 From over-pricing and false claims for medical services, to gross misconduct and mismanaged care of senior citizens in nursing homes, the pharmaceutical industry leads the pack in health care fraud and abuse. It’s been that way for decades. That’s why the U.S. government has repeatedly enacted new laws – in 1986, 1996, 2009, and 2010 – to crack down on offenders.

The 1986 legislation strengthened a Civil War-era fraud law, the False Claims Act, with incentives for private citizens to report fraud and abuse of government programs by corporate America.7 This law enabled “whistleblowers” to expose corporate criminals whose crimes had previously gone undetected. But it didn’t stop these crimes, so a decade later Congress created the Health Care Fraud and Abuse Control (HCFAC) program, which provides for huge fines and prison sentences for health care fraud and abuse.

Enacted with the passage of the Health Insurance Portability and Accountability Act (HIPAA) and administered jointly by the Department of Justice (DOJ) and Health and Human Services (HHS), this program has returned over $18 billion to the Medicare Trust Fund since 19978 – most of which came from pharmaceutical companies. It, too, helped root out previously undetected corporate criminals, as well as those committed by individuals, hospitals and other health service providers.

Still, the fraud went on. So, in 2009, Congress enacted yet another enforcement tool under the Affordable Care Act and the formation of the Health Care Fraud Prevent & Enforcement Team (HEAT). In 2010 alone, the DOJ and HHS reported they’d collected a total of $4 billion as a result of judgments and settlements involving Medicare.9

The bulk of these funds are from drug companies, making the pharmaceutical industry the new government fraud leader, surpassing the former top fraud perpetrator, the defense industry.10 That’s why HHS and the DOJ decided in 2010 to form yet another committee to address just drug company crimes: The Pharmaceutical Fraud Pilot Project (PFPP),11 with the goal of rooting out pharmaceutical, biologic, and medical device fraud.

It’s quite clear that the fraud and deceit against Medicare by Big Pharma is so great that no amount of anti-fraud agencies seem capable of stopping it. This is evidenced by the fact that many drug companies are repeat offenders. Fines for illegal activities appear to be viewed as the cost of doing business… Is it any wonder then that some of the drug companies repeatedly caught defrauding the Medicare system are also listed in’s Top Corporate Criminals of the 1990s?

Big Pharma’s Offshore Fraud Strategy

Over the past few years, Pfizer, GlaxoSmithKline, Bristol-Myers, AstraZeneca, and Abbott Laboratories have all paid huge sums to settle civil and criminal allegations of illegal sales and marketing practices. Most recently, GlaxoSmithKline plead guilty in the largest health fraud settlement in US history. The company was fined $3 billion to resolve criminal and civil liability charges related to illegal drug marketing andwithholding information about health hazards associated with its diabetes drug Avandia.

Proving that illegal business practices are standard practice within the pharmaceutical industry, Forbes12 recently reported that many pharmaceutical companies are now being investigated for using bribes to boost sales outside the US as well. Referred to as “emerging markets,” these potential consumers are located in Asia, Europe, and the Middle East.

The U.S. Foreign Corrupt Practices Act (FCPA) makes it illegal to bribe foreign officials to win business, but nonetheless it happens – as evidenced by Pfizer, the world’s largest drugmaker, which paid $60.2 million to the U.S. in August to settle charges that the company bribed an assortment of government health officials, including doctors, in China, Russia, Italy, Bulgaria, Croatia, Servia, and Kazakhstan.

According to Forbes:

“The company had something of a ‘frequent flyer’ program for bribery. ‘Pfizer subsidiaries in several countries had bribery so entwined in their sales culture that they offered points and bonus programs to improperly reward foreign officials who proved to be their best customers,’ said Kara Brockmeyer, Chief of the SEC Enforcement Division’s Foreign Corrupt Practices Act Unit.”

Have You Taken Control of Your Health?

As you can see, there’s no shortage of evidence that the U.S. health care system is in need of urgent transformation. Hundreds of thousands are killed by medical care itself, while others are walking around with far less than stellar health due to conventional treatments. Rates of chronic diseases are through the roof, and we’re facing epidemics of obesity, heart disease, diabetes, depression and too many others to list. As a whole, Americans are not healthy – they’re tired, depressed, stressed out and often in pain.

As patients, many people have taken their health into their own hands by abandoning this fatally flawed medical model and embracing holistic modalities that can help heal on a body-wide level.

It’s important to remember that the more you take responsibility for your own health – in the form of nurturing your body to prevent disease – the less you need to rely on the “disease care” that passes for health care in the United States. If you carefully follow some basic health principles – simple things like exercising, eating whole foods, sleeping enough, getting sun exposure, and reducing stress in your life – you will drastically reduce your need for conventional medical care, which in and of itself will reduce your chances of suffering ill side effects.

I recently completed the first major revision of my Nutrition Plan, which can guide you, step by step, toward optimal health. It’s now significantly improved and contains a number of updated recommendations, such as the addition of fermented vegetables as a source of healthful probiotics; and using intermittent fasting and high intensity exercise to really optimize your health.

The Plan is divided into three stages: beginner, intermediate, and advanced. If you realize you’re already doing all the things included in the beginner’s phase, then it may be time to move on to the next phase.

I strongly recommend reviewing the revised Nutritional Plan whenever your schedule allows. It is a very detailed and comprehensive program – it’s basically an entire book, in multi-media format, as we’ve now added lots of informative videos to it as well. If you’re new to the site, I encourage you to go through it from the beginning as it is one of the most powerful tools to truly allow you and your family to take control of your health.

After you’ve reviewed the plan, feel free to add your feedback or comments about the plan in the Vital Votes section on the re-launch page.

You Can Influence Your Doctor

In the event you do need medical care, seek a health care practitioner who will help you move toward complete wellness by helping you discover and understand the hidden causes of your health challenges… and create a customized and comprehensive – i.e. holistic – treatment plan for you.

What’s more, you can have an impact on your doctor’s tendency to recommend natural alternatives, as when you inquire about them, some health care providers do in fact listen. Remember, when you do go to the doctor, know that it’s OK to ask questions and opt for less medical intervention while choosing a more natural way of healing your body.

If your physician is not open to such options, it may be time to find one who is, who can help coach you and your family to take control of your health. Φ

Dr. Joseph Mercola is an internationally well-known national health physician and doctor of  osteopathy.  He is also the founder/editor of, a #1 visited website. On his website, Dr. Mercola promotes lifestyle and dietary changes, along with supplements to improve an individual’s health.

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