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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: 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.