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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: 2) by istartedi on Thursday January 09 2020, @11:57PM

    by istartedi (123) on Thursday January 09 2020, @11:57PM (#941686) Journal

    That $11k goes further than you might think. Heck, let's cut that to less than half, $5k for example. It's an average. You know how many people go an entire year without seeing a doctor? A lot, especially in their 20s and 30s. It's not such a hot idea, but even if you lump in a bunch of people who get one $100 check-up each year with one heart attack patient, $5k average per person can actually work--especially if we reduce costs in sensible ways like other countries do.

    It's one of those lessons I learned a long time ago in school: "nothing kills an average quite like a zero". In that context, it was used to emphasize the fact that you should always turn in an assignment even if you thought you'd get an F on it, because throwing a score of 50 or 60 into your test average is much less worse than throwing in a zero. In this case, it's the opposite--throwing in a bunch of zeros or really cheap patients makes things better than you might imagine.

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