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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: 4, Interesting) by meustrus on Thursday January 09 2020, @04:43PM (7 children)

    by meustrus (4961) on Thursday January 09 2020, @04:43PM (#941485)

    Aren't the costs you're talking about mainly for cutting-edge treatments (i.e. still under patent)? The manufacturing and administration cost of the vast majority of treatments is well below their controlled costs. The latest and greatest cancer drugs might be hugely expensive to pay for their R&D, but those don't necessarily need to be covered by the government.

    Not everyone talking about universal health care agrees with this. It's a bit hard politically to make the argument that we still need private health insurance to pay for the obscenely expensive treatments. People want to believe everyone gets the same standard of care. Rich people also expect better though ¯\_(ツ)_/¯

    But if we separated health care into "basic things we understand really well" and "cutting-edge treatments we're still throwing money at", it would have a lot of benefits. Besides the huge cost savings, doctors might have more reason to limit their suggestions to the treatments they actually understand, instead of the new expensive stuff they couldn't possibly have studied in school.

    The potential downside is that medical research slows down. This could be offset with more funding for medical research done in a university setting instead of for a pharmaceutical company. The cost could still be less than funding the current system because it doesn't require anywhere near the same level of bureaucracy.

    Then the question is: how effective is university research compared to corporate research? I don't have nearly enough information to answer this question. I wonder if the shift in profit motive would result in less research into treatments mainly benefiting people too poor for private insurance, but that problem already exists and it's hard to imagine it getting worse.

    But if it comes down to either A) everyone managing a highly stressful financial burden to get basic and cutting-edge healthcare in the same package, or B) getting basic healthcare for a basic price and not getting buried by opaque bills, but losing access to cutting-edge treatments...I pick option B.

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  • (Score: 2) by The Mighty Buzzard on Thursday January 16 2020, @04:25PM (6 children)

    by The Mighty Buzzard (18) Subscriber Badge <themightybuzzard@proton.me> on Thursday January 16 2020, @04:25PM (#944069) Homepage Journal

    No, they're for all new drugs, treatments, and machinery. Most of that shit is developed right here because we spend enough on healthcare to fund it.

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    • (Score: 2) by meustrus on Thursday January 16 2020, @09:14PM (5 children)

      by meustrus (4961) on Thursday January 16 2020, @09:14PM (#944239)

      ...I'm not sure how your statement contradicts mine. "new drugs, treatments, and machinery" == "cutting-edge treatments (i.e. still under patent)". My argument is that maaybe it should be possible to get a basic plan for cheap that doesn't cover these things, possibly provided by the government because there's pretty much no chance a free market can find any cost savings in the basics.

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      • (Score: 2) by The Mighty Buzzard on Friday January 17 2020, @05:07PM (4 children)

        by The Mighty Buzzard (18) Subscriber Badge <themightybuzzard@proton.me> on Friday January 17 2020, @05:07PM (#944597) Homepage Journal

        Oh but there is every chance. The problem is the government actively works against it happening because they're being extremely well paid to.

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        My rights don't end where your fear begins.
        • (Score: 2) by meustrus on Friday January 17 2020, @08:32PM (3 children)

          by meustrus (4961) on Friday January 17 2020, @08:32PM (#944705)

          Are you saying that the government is well paid to waste money? What an interesting idea. Usually, internal and external politics are much stronger forces towards eliminating waste. It's why everyone in government, especially executives, makes significantly less money than they would doing the same job in the private sector.

          Your idea isn't unheard of, though. Lobbyists have been trying to kill the Post Office for years. They mostly do that by preventing any investment in new services and modernization, though. Even when they tried to force the business into the red with wasteful expenditures, the best they could come up with is dumping money into the pension fund. Despite all this effort, though, the Post Office still costs zero taxpayer dollars.

          Or were you talking about the military? It's funny how impossible it is to kill wasteful spending when Republicans like it. Sure, you can go on about local representatives and their pork barrel spending like it's still the 90s, but when it comes down to it, nobody can kill an expensive failure like the F-35 because it would make them look weak. Military spending is special. Budget hawks only go after social programs.

          The more effective way to make government programs hopelessly wasteful is to "privatize" them. This scheme lets the program costs explode via deliberately bad contracts which eliminate all voter accountability to bring those costs back down. I don't count this scheme as a government program, though, because it's always sold as a "free market" solution. Regulatory capture doesn't happen in secret. It is voted for by people who have been led to believe that government is the problem, therefore we have to turn government programs over to somebody that is "not the government" (since voters actually love those programs so we couldn't actually get rid of them).

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          • (Score: 2) by The Mighty Buzzard on Friday January 17 2020, @10:18PM (2 children)

            by The Mighty Buzzard (18) Subscriber Badge <themightybuzzard@proton.me> on Friday January 17 2020, @10:18PM (#944764) Homepage Journal

            I'm saying that the government takes colossal fuckloads of money from pharmaceutical and insurance lobbyists to ensure that every monopoly power they can get away with having is theirs for as long as possible. Which lowers incentive to innovate or control costs in any way.

            See, you're looking at government spending and saying they have incentive to make it as efficient as possible in the voters. I'm saying that isn't remotely the case, because any spending increase the Democrats can't sell to their voters, the Republicans can sell to theirs. Neither party has any smidgen of fiscal responsibility whatsoever; they only pretend they do when they're out of power and can't do anything about it anyway.

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            • (Score: 2) by meustrus on Saturday January 18 2020, @06:47PM (1 child)

              by meustrus (4961) on Saturday January 18 2020, @06:47PM (#945034)

              Your first and second paragraphs read as completely separate points.

              Yes, lobbyists spend fucktons of money on getting the policy they like enshrined in law. That has zero connection to money spent executing the law or maintaining government bureaucracy. Pharma having monopoly power is fundamentally different from socialized medicine, and in fact Pharma is spending their fucktons of lobbying money to try and prevent socialized medicine taking their monopoly away.

              As far as spending in general, it's been my perception that Democrats like to try pushing new costly programs paid for by new taxes, while Republicans like to cut taxes for the wealthy at the expense of existing social programs. That's a huge oversimplification, and it glosses over the tendency of individual politicians to bring tax money back to their district.

              None of this has any bearing on my argument, which continues to be (in new words) that a taxpayer-funded program for basic medical care, supplemented by private insurance plans covering cutting edge treatments for more rare or costly diseases, would be vastly more efficient than the current system. That the government on its own is fundamentally better suited to administering basic healthcare for things like infections, broken bones, and even long-understood chronic conditions like diabetes, than a free market ever could be, let alone the public-private revolving door of corruption we have now.

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