CHICAGO - Low-quality health care in the United States is costing nearly $400 billion a year, about 30 percent of the total $1.3 trillion annual medical expenditures in the nation, according to a study to be released today in Chicago.

Medical errors and unnecessary treatments to misused drugs and bureaucratic waste - new research suggests such problems compromise quality medical care and each year cost private employers $1,700 to $2,000 per insured worker.

The findings in a study commissioned by the Chicago-based Midwest Business Group on Health come as employers are wrestling with soaring health-care costs. Premiums are up 16 percent this year for most large employers, while smaller companies are seeing larger cost increases, analysts say.

Now, researchers say, employers and the government could do something about their high medical costs. Public insurers and private employers can be smarter purchasers by demanding better quality medical service and information from doctors, hospitals and health insurance companies, these researchers say.

"CEOs and CFOs need to know that there is real money being spent for poor quality care, and it's costing a lot," said Jim Mortimer, president of the Midwest Business Group, a nonprofit coalition of major employers in 11 states, including Chicago's Bank One Corp. and Minneapolis-based Target Corp., owner of Marshall Field's.

As one example, the report estimates the cost of treating diabetes at $98 billion annually but says that amount could be reined in if the disease were diagnosed early, preventing "tens of thousands of cases" of premature death, limb amputations, kidney disease or blindness.

The average worker with diabetes loses 11.3 hours of work each week because of the disease, the report states.

The Midwest Business Group report used dozens of studies and previously published reports to compile its analysis, as well as dozens of interviews with business and health industry executives. The Juran Institute, an international research group, assisted in the analysis, which has been in the works for the past two years.

To help control costs, the study's authors are advocating that employers better scrutinize the choice of doctors, hospitals and health plans they offer their workers.

Often, employers choose the cheapest insurance without examining its quality and the performance of doctors and hospitals in the health plan's network, the report indicates.

Bruce Japsen is a reporter for The Chicago Tribune, a Tribune Publishing newspaper.