The Society of Actuaries Health Section sponsored Milliman, Inc. to measure the annual frequency of medical errors in the United States and the total measurable cost to the United States economy of these errors. This effort is based upon an analysis of an extensive claim database, and it therefore relies upon medical events which have been submitted for payment by medical providers. Measureable costs of medical errors include increased medical costs, costs related to an increased mortality rate, and costs related to lost productivity after the occurrence of an error. Most other costs of medical errors, such as pain and suffering, are not measureable from medical claim databases. Neither malpractice costs nor insurance payments have been measured; nor have we attempted to identify the cost associated with prevention of errors. An error is defined as a preventable adverse outcome of medical care that is a result of improper medical management (a mistake of commission) rather than a progression of an illness due to lack of care (a mistake of omission). This report is intended for the benefit of the Society of Actuaries. Although we understand that this report will be made widely available to third parties, Milliman does not assume any duty or liability to such third parties with its work. In particular, the results in this report are technical in nature and are dependent upon specific assumptions and methods. No party should rely upon these results without a thorough understanding of those assumptions and methods. Such an understanding may require consultation with qualified professionals. This report should be distributed and reviewed only in its entirety.