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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: 4, Interesting) by JoeMerchant on Thursday January 09 2020, @05:38PM (1 child)
Maybe in R&D, but the bulk of healthcare costs in the US - as mentioned in the article: 33% for administrative overhead alone. Then you pay for the M.D.s and flock of attendant nurses, drug reps, sales, marketing, etc. - these aren't costs that the US is footing for anyone.
Devices & supplies? A lot like the construction industry, it's not the materials, it's the labor. A $15K implant that costs another $15K for the surgery to implant - cost of device? $600. Cost of sales and marketing to convince the patient to charge the $30K procedure to insurance and have it put in their body? $14,800 (those were 2005 costs for a company I worked for).
So, yeah, that $600 device might be cost controlled in the UK to $12K -ooh! we're "subsidizing" the NHS with a $3K discount on our device. No, the NHS has told our sales people to fuck right off and they'll let their patients decide without high pressure psychology from the manufacturer whether or not they want the device. The company actually makes MORE profit on the $12K devices sold in the UK even with overseas travel for sales and marketing people: because they're not doing the hard sell over there. True, overall profits per capita are far down because implantation rates are lower without the hard sell, but per unit profits are up.
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(Score: 2) by The Mighty Buzzard on Thursday January 16 2020, @04:28PM
And? You think they'd cut the pencil pushers or the research if they were forced to a much lower profit margin? Keep in mind they're very much wielding monopolistic power and have no incentive to improve except expiring patents that they mostly make eternal through evergreening anyway.
My rights don't end where your fear begins.