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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: 5, Informative) by Phoenix666 on Thursday January 09 2020, @01:47PM (9 children)
While they have been growing the size and expense of the healthcare bureaucracy, they have been lowering the quality of the care. I can't remember the last time I saw a nurse who was not from the Caribbean or imported from some other low-wage place to bring down the cost of nursing wages. We pay more for less so healthcare execs can take home a bigger bonus to buy a fifth house they don't need.
We should all be helping ourselves more, though. If we stop eating processed food and leading sedentary lifestyles we'll be a lot healthier and need medical intervention far less.
Washington DC delenda est.
(Score: 0) by Anonymous Coward on Thursday January 09 2020, @01:54PM (2 children)
I was just watching one of those street Q and A things on YouTube and there was a young college/nurse couple who thought the US was formed in the 1970s, we lived in the 50th century, and didn't know what a decade was.
(Score: 4, Informative) by JoeMerchant on Thursday January 09 2020, @05:42PM
She sounds smarter than our President.
🌻🌻 [google.com]
(Score: 2) by hendrikboom on Thursday January 09 2020, @07:58PM
Was any of that relevant to nursing?
(Score: 3, Informative) by meustrus on Thursday January 09 2020, @04:52PM (2 children)
How does that work, exactly? Those low-wage places are low-wage because they are also low-cost-of-living. Bring those workers into my town and they have to pay my level of rent. And they still need the same expensive credentials.
Maybe some hiring manager can take advantage of some poor brown people who don't have better prospects. But I think it's more likely that you're just seeing demographic shifts.
I'd expect to see more recent immigrants in traditionally female-associated jobs because of their gender politics. People from those "low-wage places" tend to be more socially conservative than people whose family has been in America for many generations. Nursing is still very female-associated, for example, so recent immigrants who are less willing to work outside their established gender norms are going to be over-represented in nursing compared to white women who are more likely to consider a broader variety of career options.
If there isn't at least one reference or primary source, it's not +1 Informative. Maybe the underused +1 Interesting?
(Score: 4, Insightful) by hendrikboom on Thursday January 09 2020, @08:01PM (1 child)
The majority of medical students here in Canada are female.
It was not so fifty years ago.
-- hendrik
(Score: 2) by meustrus on Friday January 10 2020, @04:25PM
Yeah, there's a difference between doctors and nurses. I was talking about nurses.
If there isn't at least one reference or primary source, it's not +1 Informative. Maybe the underused +1 Interesting?
(Score: 5, Insightful) by DeathMonkey on Thursday January 09 2020, @06:54PM (1 child)
Alternative hypothesis: Americans are too dumb and poorly educated to do these important jobs.
(Score: 2) by meustrus on Friday January 10 2020, @04:27PM
Anybody with enough drive can go to nursing school. Nobody gets to skip nursing school.
Seems to me the problem would be laziness, not stupidity.
If there isn't at least one reference or primary source, it's not +1 Informative. Maybe the underused +1 Interesting?
(Score: 1, Interesting) by Anonymous Coward on Thursday January 09 2020, @07:48PM
Agreed. But on a broader scale, part of the problem is busy schedules. I know plenty of retirees that are fitness fanatics. Once you're done with the 50 hour work week with the long commute you find that making a salad, going for an hour walk, and and spending another hour each day at a gym is a lot easier.
Another part of the problem is just structural in the US. I live in the suburbs because the public school district here is much better than any districts in nearby towns of 10,000 or more residents. So my kids get a good education, which will improve their employment prospects. But I can't walk to the grocery store, to a friend's house, to work, anywhere, really. Neither can my kids. And all of the time we should be spending walking, exercising, and making healthy meals is spent driving somewhere.
And of course for lots of families, poverty is the issue. You can get an huge package of Ramen noodles and a big box of generic cookies from a grocery store for $1.50 each. That's $3 for thousands of calories of food. $3 will also buy a pound and a half of apples near me, barely 300 calories. I had Ramen for half my meals growing up because we couldn't budget for a good mix of fruits and vegetables. One of my kids - just one - eats a quart of strawberries, a quart of raspberries, four pounds of tomatoes, and pounds of chicken in a week. He's eating near $50 in food each week by himself. His childhood is much healthier than mine, but my parents couldn't have budgeted the inflation-adjusted equivalent to $50 per week for me.