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Study: More than a third of healthcare costs go to bureaucracy:
U.S. insurers and providers spent more than $800 billion in 2017 on administration, or nearly $2,500 per person – more than four times the per-capita administrative costs in Canada’s single-payer system, a new study finds.
Over one third of all healthcare costs in the U.S. were due to insurance company overhead and provider time spent on billing, versus about 17% spent on administration in Canada, researchers reported in Annals of Internal Medicine.
Cutting U.S. administrative costs to the $550 per capita (in 2017 U.S. dollars) level in Canada could save more than $600 billion, the researchers say.
“The average American is paying more than $2,000 a year for useless bureaucracy,” said lead author Dr. David Himmelstein, a distinguished professor of public health at the City University of New York at Hunter College in New York City and a lecturer at Harvard Medical School in Boston.
“That money could be spent for care if we had a ‘Medicare for all program’,” Himmelstein said.
To calculate the difference in administrative costs between the U.S. and Canadian systems, Himmelstein and colleagues examined Medicare filings made by hospitals and nursing homes. For physicians, the researchers used information from surveys and census data on employment and wages to estimate costs. The Canadian data came from the Canadian Institute for Health Information and an insurance trade association.
When the researchers broke down the 2017 per-capita health administration costs in both countries, they found that insurer overhead accounted for $844 in the U.S. versus $146 in Canada; hospital administration was $933 versus $196; nursing home, home care and hospice administration was $255 versus $123; and physicians’ insurance-related costs were $465 versus $87
They also found there had been a 3.2% increase in U.S. administrative costs since 1999, most of which was ascribed to the expansion of Medicare and Medicaid managed-care plans. Overhead of private Medicare Advantage plans, which now cover about a third of Medicare enrollees, is six-fold higher than traditional Medicare (12.3% versus 2%), they report. That 2% is comparable to the overhead in the Canadian system.
(Score: 2) by JoeMerchant on Monday January 20 2020, @04:48PM (4 children)
Listen to the sound of my tiny violin, not giving a single fuck.
I've given you the perspective in the past of what it costs to produce and sell a medical device (my personal career and experience), right? Drugs are much the same. You know how drug reps are recruited, right? Straight out of school based 100% on ability to influence, whether that influence is based on physical attractiveness, willingness to give lap dances, or literally whatever it takes to move the product. That's fine, but it's fucking expensive. Drug reps come into medical offices catering lunch on an unbelievable regular basis - some places literally get a really nice free lunch EVERY SINGLE DAY for every single employee in the building catered by the various drug reps. The M.D.s who have related these stories to me are generally of the position: I can buy my own lunch, but for the rest of the staff they really value it... that gets them access, expensive access, but access nonetheless to push their product.
The true astronomical costs of R&D aren't sunk into any particular drug or device, it's because of the 19 failures that make zero return for the one commercial success. Then the costs of selling those successful devices/drugs outstrip this cost of R&D by more than an order of magnitude. Then there are the smaller, but still significant, costly efforts put in for national legislation lobbying to support the whole fiasco. This is how you sell a pill that costs less than $0.40 each to make by hand for $20.00 each when it's sold through the pharma/sales rep/insurance channels. How you sell a device that costs less than $600 to make for over $30K per implantation.
The EU and ROW don't get that kind of bullshit extreme high cost hard sell treatment, even with their discounts and costs of entry to the countries, the profit margins are higher per unit overseas due to the lack of the hard-sell costs.
🌻🌻 [google.com]
(Score: 2) by The Mighty Buzzard on Monday January 20 2020, @05:02PM (3 children)
You should give a fuck. If they don't stand to make money by developing new drugs, they won't develop new drugs. And since the US develops the majority of the new drugs for the world...
My rights don't end where your fear begins.
(Score: 2) by JoeMerchant on Tuesday January 21 2020, @01:49AM (2 children)
The system has developed itself into a shitty shitty way of making new drugs, and when you break down what's really spent on R&D vs what's spent on sales, you're going to find 20 sales twats out there, 9 of whom are pulling down $300K+ per year in commissions, mostly because they're breaking policies and laws and getting away with it - short term, while the other 11 are going to be cycled through the company in less than a year hoping to find fresh meat with new ideas about how to skirt or outright break the law - that's 20 sales schmucks for every actual R&D worker, in the successful drug companies. And, as a drug company, if you don't do the hard sell on all fronts, you are not competitive in the marketplace, your funding dries up, and you die - unless maybe you're lucky enough to sell out to a big marketing company that is willing to play the game.
As for innovation - what got innovated in the insulin field in the last 10 years, besides innovative new ways to jack up the price? And, it's not just insulin, not by a longshot.
The sad part of this equation is that most major drug and device development companies are giant multi-national operations, so there's not really an opportunity for big players in other countries to prove their ability to compete.
🌻🌻 [google.com]
(Score: 2) by The Mighty Buzzard on Tuesday January 21 2020, @05:30PM (1 child)
What's your point? Sales douches are apparently necessary to keep the money flowing in at a profit level high enough to warrant the R&D expenditures or even continued existence of the companies. What levels that requires of each is irrelevant. It wouldn't make a "should we do it" difference if it were a 99% to 1% split.
My rights don't end where your fear begins.
(Score: 2) by JoeMerchant on Tuesday January 21 2020, @06:54PM
Then I guess you really don't care about innovation. As a race, we've got limited resources on this planet, if we spend 99% of those resources in each others' faces trying to convince each other to buy our shit not theirs, that leaves precious little left over to actually improve the shit with.
First, we had to quit bashing each other over the head with rocks long enough to get a decent farm going. I think we're > 99% there, globally today.
Then, we had to quit burning each other's crops long enough to get some kind of civilization going. Probably closer to 95% achieved.
Then, we had to quit spending 50%+ of our GDP on weapons and troop deployments (and actual wars) to get some actual quality of life for the majority of people. This one I'm going to rate around 50% done today - depending on your thresholds and definitions I'd say it's clearly in the 20-80% range somewhere.
I'll agree that all of that is more important than worrying about whether we spin our wheels in inefficient lawsuits, god-awful sales practices, fradulent televangelist schemes, etc. but, what really concerns me is that the "good companies" like AT&T Bell Labs used to put 20-25% of their gross proceeds into R&D, but today you're lucky to get 10%, and the trends out of Wall Street continue to squeeze on the long term investments like R&D and encourage the short term gains like sales-push. At some point, the wheels are going to fall off the bus and we will have forgotten completely how to innovate.
When drug prices are inflated 50-100x over the cost of manufacture, and 90%+ of that margin is being plowed into S&M instead of R&D, I'd say we jumped the shark some time ago.
🌻🌻 [google.com]