Medical Errors Cost the US Economy $19.5 Billion

Author: Ian C. Langtree - Writer/Editor for Disabled World (DW)
Published: 2010/09/25 - Updated: 2026/02/22
Publication Type: Informative
Category Topic: Medical - Related Publications

Contents: Synopsis - Introduction - Main - Insights, Updates

Synopsis: This information examines the financial and human costs of preventable medical errors in the United States, drawing on data from a study commissioned by the Society of Actuaries, findings from the Institute of Medicine, and reporting from The Wall Street Journal and ABC News. The actuarial study, based on insurance claims data covering 1.5 million measurable errors, found that medical mistakes and associated complications cost the US economy $19.5 billion in 2008 alone, with bedsores and postoperative infections accounting for the largest share. It also addresses the so-called July Effect - a documented rise in medical errors at teaching hospitals when new residents begin practicing. For patients, families, seniors and people with disabilities who are disproportionately affected by extended hospital stays and surgical complications, this article offers a clear picture of how widespread the problem is, what the most common and costly errors look like, and what options exist for those who have been harmed by preventable medical mistakes - Disabled World (DW).

Definition: Medical Errors: Medical errors are preventable adverse events that occur during the delivery of healthcare, ranging from medication mistakes and surgical errors to hospital-acquired infections, device complications and failures of basic patient care such as the development of pressure ulcers. The Institute of Medicine estimated that up to 98,000 Americans die each year as a result of these preventable mistakes, making medical error one of the leading causes of death in the United States. The financial burden extends beyond direct medical costs to include lost productivity, increased mortality, short-term disability and expenses passed on to patients and their families, with a 2008 actuarial study placing the total economic cost at $19.5 billion annually across an estimated 1.5 million measurable incidents.

Introduction

The Costs of Medical Errors

According to a recent ABC story, a study confirmed anecdotal evidence of the "July Effect" - a rise in medical errors during the month of July, when new residents fresh out of medical school report to their teaching hospitals. A 2000 publication by the Institute of Medicine indicated that up to 98,000 Americans may die each year as a result of preventable medical errors.

Though the qualitative costs of medical errors can be devastating, a recent article in The Wall Street Journal says the quantitative costs can also be staggering. Citing a study commissioned by the Society of Actuaries, the article says medical errors and associated problems such as bed sores, infections and complications, cost the United States economy $19.5 billion in 2008. That is nearly 25 percent of the total costs associated with medical injuries.

Main Content

Massive Financial Cost of Medical Errors

The study, based on insurance claims data, included medical costs, as well as costs associated with increased mortality rate and loss of productivity in the cost estimate. It covered 1.5 million measurable errors, a conservative estimate according to the report authors.

The report estimates that medical errors resulted in more than 2,500 avoidable deaths and over 10 million lost days of work. The study indicates the following estimated costs:

Bed sores, almost always considered to be the result of an error, represented the largest annual error cost, at nearly $3.9 billion.
Post-operation infections followed at $3.7 billion.
Device complications at $1.1 billion, tied with complications from failed spinal surgery.
Hemorrhages cost $960 million.

Jim Toole, managing director of MBA Actuaries, Inc., says the report highlights a singular opportunity to improve the overall quality of care while at the same time reducing health care costs in the country. He says that unlike automobile safety and the campaign to reduce highway deaths, there previously had been no information to provide the starting point for minimizing medical errors or injuries. Toole is making a call for federal patient safety reform, which would include a mandatory national reporting system.

Recovery and Compensation for Medical Errors

PR Newswire cites a survey in which 87 percent of actuaries believe that reducing medical errors is an effective way to control health care cost trends for the commercial population; 88 percent believe this to be true for the Medicare population. These costs are not just borne by insurers and large companies. Many of these costs are passed directly or indirectly to the individual patients and their families as well. According to the study:

Measurable medical errors in 2008 resulted in over 2,500 avoidable deaths and more than 10 million excess days missed from work due to short-term disability.
The average total cost per medical error was approximately $13,000.
An estimated seven percent of inpatient admissions resulted in some type of medical injury.

The five most costly errors to the U.S. economy each year, according to the study, are:

Pressure ulcers, or bedsores.
Postoperative infections.
Mechanical complications related to devices, implants or grafts.
Postlaminectomy syndrome.
Hemorrhages that complicate a procedure.

Toole charged the insurance companies with assuming an active role in helping health care systems implement an actuarial approach, which will identify potential causes of medical errors in a more systematic way.

Precautions which are as basic as using checklists can help reduce the risk of medical errors. Even so, thousands of patients can be and are affected by many different types of medical errors.

Insights, Analysis, and Developments

Editorial Note: The numbers in this article tell a story that the healthcare system has been slow to fully confront - that preventable medical errors are not rare events but a systemic problem costing billions of dollars and thousands of lives every year. When an actuarial study finds that bedsores alone account for nearly $3.9 billion in annual costs, it raises a pointed question about priorities, because pressure ulcers are among the most preventable complications in medicine and their presence is widely regarded as a failure of basic care. For elderly patients, people with disabilities and anyone facing extended hospitalization, these are not abstract statistics - they represent real risks that increase with every day spent in a hospital bed. The call for a mandatory national reporting system, raised in this article by actuarial professionals, remains as relevant now as it was when these figures were first published. Without consistent tracking and accountability, the same errors continue to repeat, and the people least equipped to advocate for themselves in a clinical setting continue to bear the greatest share of the consequences - Disabled World (DW).

Ian C. Langtree Author Credentials: Ian is the founder and Editor-in-Chief of Disabled World, a leading resource for news and information on disability issues. With a global perspective shaped by years of travel and lived experience, Ian is a committed proponent of the Social Model of Disability-a transformative framework developed by disabled activists in the 1970s that emphasizes dismantling societal barriers rather than focusing solely on individual impairments. His work reflects a deep commitment to disability rights, accessibility, and social inclusion. To learn more about Ian's background, expertise, and accomplishments, visit his full biography.