The Bipartisan Prescription for Cutting $1 Trillion in Healthcare Waste – Inside Sources

If history is any guide, Washington is likely headed for another period of divided government after the midterm elections. While that often signals legislative gridlock, it could also create an opportunity for something increasingly rare in American politics: bipartisan agreement on making healthcare affordable.

The place to start is one of the largest — and most overlooked — drivers of America’s fiscal and affordability challenges: the nearly $1 trillion in waste embedded in the U.S. healthcare system each year.

For years, policymakers in both parties have pledged to eliminate “waste, fraud and abuse.” The Trump administration has placed renewed emphasis on rooting out fraud through the Centers for Medicare and Medicaid Services. Those efforts deserve broad bipartisan support. Taxpayer dollars should never be lost to fraud, and the federal government should aggressively prosecute those who exploit healthcare programs.

Fraud alone will never make healthcare affordable.

If Washington is serious about reducing costs for taxpayers and families, it must confront a much larger challenge: legal, routine healthcare delivered inefficiently, priced too high, or provides little value to patients.

To paraphrase bank robber Willie Sutton, if you want to find the money, you have to go where the money is.

Research consistently estimates that one-quarter of all U.S. healthcare spending — nearly $1 trillion annually — is wasted. That waste extends far beyond criminal activity. It includes avoidable hospitalizations, unnecessary tests and procedures, fragmented care, excessive administrative complexity, preventable chronic disease, and prices that bear little relationship to clinical value.

By comparison, while healthcare fraud and improper payments remain a serious problem — estimated at $100 billion annually — they represent only a fraction of unnecessary spending. Eliminating every fraudulent claim tomorrow would still leave the overwhelming majority of waste untouched.

The larger issue facing American families is affordability.

Nearly half of U.S. adults report that healthcare costs are difficult to afford, and millions delay care, skip medications or struggle to pay medical bills. Healthcare consistently ranks among voters’ top economic concerns alongside housing, groceries and energy costs. Families don’t care whether higher costs stem from fraud, administrative inefficiency or overpriced care — they know the system has become unaffordable.

Fortunately, policymakers don’t have to choose between fiscal responsibility and better patient care. A substantial body of evidence supports reforms that reduce waste while improving outcomes.

First, we should invest more aggressively in preventing disease before it becomes expensive. Prevention, wellness and chronic disease management consistently generate long-term savings while improving quality of life. Expanding access to smoking cessation programs, obesity treatment, behavioral health services, and recommended screenings for cancer, diabetes and other chronic conditions would reduce downstream spending while improving population health.

Second, Congress and CMS should continue accelerating the transition from volume-based reimbursement to value-based care. Paying providers based on quality and outcomes rather than the number of services delivered has received bipartisan support across multiple administrations. Both the first Trump administration and the Joe Biden administration expanded promising value-based payment models, many of which demonstrated meaningful improvements in quality and Medicare savings.

Third, policymakers should expand Value-Based Insurance Design (VBID), which encourages patients to use high-value services while discouraging low-value care through smarter benefit design. Decades of evidence show VBID improves health outcomes, particularly for individuals living with chronic illness, while lowering unnecessary spending. Few reforms enjoy broader support across employers, health plans, providers, patient advocates and policymakers.

Fourth, Washington must continue addressing the high prices that drive healthcare spending. Prescription drugs remain one of the fastest-growing cost pressures facing government programs and American families. The federal government should continue strengthening Medicare drug price negotiations, accelerate competition through biosimilars and generics, and reform patent practices that unnecessarily delay lower-cost alternatives. These reforms would generate tens of billions of dollars in savings without compromising innovation.

Fifth, policymakers should tackle one of the least discussed — but most bipartisan — sources of waste: administrative complexity. Physicians, hospitals and health plans collectively spend billions each year navigating duplicative paperwork, prior authorization requirements, billing systems and reporting mandates. Simplifying these processes would lower costs throughout the system without reducing a single medically necessary service.

Finally, Congress should accelerate responsible adoption of technologies that improve efficiency and precision. Artificial intelligence can help clinicians identify high-risk patients, reduce administrative burden, and improve care coordination, while pharmacogenomics enables physicians to prescribe medications more likely to work for individual patients and less likely to produce costly complications.

Used appropriately, these innovations can improve outcomes while reducing unnecessary spending.

None of these reforms is inherently Republican or Democratic. In fact, nearly all have enjoyed bipartisan support at various points over the past two decades. They share a common principle: reducing waste by improving value rather than shifting costs to patients, providers or states.

As Washington prepares for another chapter of divided government, lawmakers should resist the temptation to define success solely by the number of fraudulent claims uncovered or dollars recovered through enforcement actions. Fraud should always be prosecuted aggressively — but it will never solve America’s affordability crisis on its own.

The real opportunity lies in attacking the much larger pool of waste that drives healthcare costs for families, employers and taxpayers. If Congress and the administration can unite around that goal, they could achieve something that has become all too uncommon in Washington: a bipartisan reform agenda that improves care, strengthens federal finances and makes healthcare more affordable.

A trillion-dollar opportunity like that is too large to ignore.