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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 Thursday January 09 2020, @05:22PM (1 child)
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 $6K cancer removal procedure during those years - same procedure "allowed charges" would have been far lower with insurance, actual cost lower still. As an individual presented with these bills our options were: pay, ask for reduced rate because we are private pay and get a 90% bill, or let it go to collections.
Nobody anywhere (other than one AC on the internet) has told me it's any better today. The insurance companies and service providers continue to play the "billed amount: 10-20x, allowed by insurance: 1x, patient responsibility: 0.2x" game. You try going uninsured into an oncology department and see what kind of bill you receive, if they'll even treat you in the first place - you're going to have to demonstrate ability to pay before seeing the M.D. in most practices.
🌻🌻 [google.com]
(Score: 0) by Anonymous Coward on Thursday January 09 2020, @09:36PM
Vision services are different than medical for sure, but I just went to the optometrist and paid 90$ 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.