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posted by janrinok on Thursday January 09 2020, @12:40PM   Printer-friendly
from the pen-pushers-are-expensive dept.

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.


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  • (Score: -1, Flamebait) by Anonymous Coward on Thursday January 09 2020, @02:58PM (8 children)

    by Anonymous Coward on Thursday January 09 2020, @02:58PM (#941428)

    What is this "we" stuff? You are making the choice to go away your money to insurance companies. You could have been putting that $20k in stocks instead and you would have millions of dollars for health expenses by now (that would cost at least half of what insurance charges your too!). Just because you act like an idiot why do the rest of us have to pay?

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  • (Score: 2) by JoeMerchant on Thursday January 09 2020, @03:58PM (7 children)

    by JoeMerchant (3937) on Thursday January 09 2020, @03:58PM (#941465)

    could have been putting that $20k in stocks instead and you would have millions of dollars for health expenses by now

    No, I couldn't, because I work for a company that pays $16K to the insurance companies, my elective portion is only $4K - most large companies are like this.

    Now, when we were younger, and insurance was cheaper, and I worked for a small company and had to get private pay, IIRC my wife and I paid something like $6K per year for both our insurance combined. The Ob/Gyn mismanaged our first pregnancy and my wife ended up taking a 6 day $30K tour through ICU - which private pay insurance responded to by raising her rates from $3K per year to over $12K per year due to "pre-existing conditions" which happened during our continuous coverage, apparently that was legal within in the rules at the time. We did respond by dropping her insurance and banking the $12K/yr for the next two years. Now, it just so happens that after two years I ended up working for a larger company with group insurance, so we just kept the $24K and had company coverage for birth #2 which went without complications. Fifteen years later, a friend of mine had a similar complication during pregnancy - the 2015 bill for it was over $80K, it's probably over $100K today. During those two years while we were private pay, we discovered that just about everything is 10x more expensive for private pay than it is while you are covered by insurance. You can ask for consideration and maybe get 10% off, but otherwise, a Dr. visit that would have been $60, patient portion $25 with insurance is billed at $590 and if you ask nicely they'll reduce that to $530, since you're private pay. Still, paying these inflated rates we came nowhere near even $3K per year in normal healthcare costs.

    But, if we had banked that $3K per year per person and invested in the boom/bust cycles of the market, as long as we didn't hit any big bills during a bust cycle, we'd be ahead today- but not by millions, maybe $100K, maybe less - but our healthcare events have been minimal. Hit one of those $100K hospital stays - oh, that's insured cost, private pay is going to run closer to $1M, and you're done - the hospital now owns your house, cars, and anything else not protected from them by law.

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    • (Score: 0) by Anonymous Coward on Thursday January 09 2020, @04:20PM (6 children)

      by Anonymous Coward on Thursday January 09 2020, @04:20PM (#941476)

      Hit one of those $100K hospital stays - oh, that's insured cost, private pay is going to run closer to $1M

      The opposite is true. $100k chargemaster insurance price equates to $1k-50k cash price (depends on the exact stuff done). But keep shilling for the insurance companies.

      https://en.wikipedia.org/wiki/Chargemaster [wikipedia.org]

      • (Score: 2) by JoeMerchant on Thursday January 09 2020, @05:22PM (1 child)

        by JoeMerchant (3937) on Thursday January 09 2020, @05:22PM (#941512)

        No argument that the actual cost of services is far lower than what they bill.

        Our experience in the 2001-2003 timeframe was that we were presented with outrageous bills for any medical treatment my wife did receive, literally the $500 office visit, and she did have a $6K cancer removal procedure during those years - same procedure "allowed charges" would have been far lower with insurance, actual cost lower still. As an individual presented with these bills our options were: pay, ask for reduced rate because we are private pay and get a 90% bill, or let it go to collections.

        Nobody anywhere (other than one AC on the internet) has told me it's any better today. The insurance companies and service providers continue to play the "billed amount: 10-20x, allowed by insurance: 1x, patient responsibility: 0.2x" game. You try going uninsured into an oncology department and see what kind of bill you receive, if they'll even treat you in the first place - you're going to have to demonstrate ability to pay before seeing the M.D. in most practices.

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        • (Score: 0) by Anonymous Coward on Thursday January 09 2020, @09:36PM

          by Anonymous Coward on Thursday January 09 2020, @09:36PM (#941608)

          Vision services are different than medical for sure, but I just went to the optometrist and paid 90$ in cash for a full exam and glasses prescription. Insurance price would have been ~60$ and premium about a dollar a month. I probably did get overcharged, but I haven't had an eye exam for 5 years, and the difference was made up by the premia I saved.

      • (Score: 0) by Anonymous Coward on Thursday January 09 2020, @08:02PM

        by Anonymous Coward on Thursday January 09 2020, @08:02PM (#941577)

        The wikipedia link you provided states exactly the opposite. Insurer get a huge discount. Cash payers end up with the full charge master price.

      • (Score: 0) by Anonymous Coward on Thursday January 09 2020, @09:48PM (2 children)

        by Anonymous Coward on Thursday January 09 2020, @09:48PM (#941619)

        $100k chargemaster insurance price equates to $1k-50k cash price

        It may be what they are willing to accept in compromise if they knew they couldn't collect more. But if you have built up any assets in your life at all, why would they negotiate with you after you consumed the services? It would be like buying the market price lobster in a restaurant and trying to negotiate the price down when you found out they charged $200. Good luck with that.

        • (Score: 0) by Anonymous Coward on Friday January 10 2020, @03:32AM (1 child)

          by Anonymous Coward on Friday January 10 2020, @03:32AM (#941756)

          Because dealing with the insurance company is that much worse... and that is usually what they get in the end anyway. The price *you* see is just the start of negotiations between the hospital and insurance company. Do people just give away tens of thousands of dollars each year without looking into where it goes at all?

          • (Score: 0) by Anonymous Coward on Friday January 10 2020, @04:36AM

            by Anonymous Coward on Friday January 10 2020, @04:36AM (#941766)

            You're not getting the point. The inflated chargemaster pricing is what hits you if you do not have applicable insurance (or better put "membership in a discount plan the provider accepts"). The insurance companies will negotiate flat rates per code that 1) they will pay and 2) can be passed to the end user. With "Obamacare", you have some say in what insurance company you pick for the next year.

            I still have traditional insurance through a major employer. I pay a token amount a month for decent health insurance, and my membership is good at most local facilities. One of my friends foolishly had a blood test done at a provider that (he didn't know) was out of network, and he got billed for $5k and the insurance company would only cover a couple of hundred for Usual and Customary pricing. He still had to come up with the rest the provider demanded.

            Do people just give away tens of thousands of dollars each year without looking into where it goes at all?

            With the insurance companies, yes, because the affordable care act forces people to buy insurance through these providers or get penalized on taxes.
            With providers - ignorance of what they charge, or whether you are covered with them, is at your own peril. Like walking into a random restaurant and ordering stuff. The "cash is king" people that pop up around these conversations may have a point if they negotiate before getting services, supposing the provider even cares to get into this kind of discussion.