# Health Care: Where does the Money Go? **URL:** \ **Category:** Great Debates\ **Created:** [September 13, 2009, 9:05pm UTC](https://boards.straightdope.com/t/health-care-where-does-the-money-go/509952 "2009-09-13T21:05:12Z")\ **Posts on this page:** 5\ **Page:** 3
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [October 3, 2009, 12:52am UTC](https://boards.straightdope.com/t/health-care-where-does-the-money-go/509952/41 "2009-10-03T00:52:59Z")
> [@RingsOfPylon](#): > > The information is a couple of years old, but the average profit margin is just under 6%. Health insurance is not a high profit industry. > > It is good to have some profits, as the companies need to have money in reserve in case of things like flu epidemics, or a bad year the following year(s) where payouts exceed revenues. After all, they’re not like the government and can’t print up funny money to cover costs of a sudden surge in claims. [Health Insurance Executive Compensation Will Make You Sick](http://girldujour.wordpress.com/2009/06/10/health-insurance-executive-compensation-will-make-you-sick/) Health insurance profits look smaller because they pass so much onto their execs. They pay their staffs tons of money making it appear they are not as profitable as they are. In these days of creative accounting ,you can not believe them. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [October 3, 2009, 12:57am UTC](https://boards.straightdope.com/t/health-care-where-does-the-money-go/509952/42 "2009-10-03T00:57:06Z")
[http://www.heritage.org/research/healthcare/wm1959.cfm](http://www.heritage.org/research/healthcare/wm1959.cfm) This is why we waste money on durable goods. You can buy things that medicare provides for a lot less money. There should be a law mandating competitive bidding for every thing the government buys. ---
**Author:** ![Mr.Duality](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mr.duality/32/4098_2.png) [@Mr.Duality](https://boards.straightdope.com/u/Mr.Duality)\ **Post date:** [October 3, 2009, 6:35pm UTC](https://boards.straightdope.com/t/health-care-where-does-the-money-go/509952/43 "2009-10-03T18:35:05Z")
[http://www.nytimes.com/2009/09/28/us/28iht-letter.html?\_r=2&pagewanted=1](http://www.nytimes.com/2009/09/28/us/28iht-letter.html?_r=2&pagewanted=1)"only 60 percent of the cost of individually sold policies goes to paying for health care; the rest is for overhead, marketing and profits."]only 60 percent of the cost of individually sold policies goes to paying for health care; the rest is for overhead, marketing and profits. that says “only 60 percent of the cost of individually sold policies goes to paying for health care; the rest is for overhead, marketing and profits.” So marketing is separate from overhead and profits? ---
**Author:** ![Sage\_Rat](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/sage_rat/32/399_2.png) [@Sage\_Rat](https://boards.straightdope.com/u/Sage_Rat)\ **Post date:** [October 3, 2009, 6:42pm UTC](https://boards.straightdope.com/t/health-care-where-does-the-money-go/509952/44 "2009-10-03T18:42:55Z")
> [@GIGObuster](#): > > [http://content.healthaffairs.org/cgi/content/full/22/3/89](http://content.healthaffairs.org/cgi/content/full/22/3/89) > > So, where does the money go? > [http://content.healthaffairs.org/cgi/content/full/22/3/89](http://content.healthaffairs.org/cgi/content/full/22/3/89) Oh my god! I never would have realized that our spending is considered so high compared to others because we spend more and get less out of it! I’m glad you told me this! (Or no actually I’d read it before. Darn.) About the only thing that article says of any practical value is that the course of the money is labyrinthine, which is itself probably a source of money loss. That is however unquantified and speculative. Assuming it to refer to the excess administration of having many, small insurance providers and corporate profit, _these are both quantified_. Consistently insisting that the unresolved $2000 PPPY sits on private insurance like so: > [@](#): > > Health insurance profits look smaller because they pass so much onto their execs. They pay their staffs tons of money making it appear they are not as profitable as they are. In these days of creative accounting ,you can not believe them. This is just silly. Crying conspiracy is almost guaranteed to be the wrong answer for any question. Provide actual numbers from a decent source and I’ll consider them. But as yet, I’ve seen nothing which indicates anything other than that private insurance costs roughly $1000 PPPY between administration and profit. > [@](#): > > [http://www.heritage.org/research/healthcare/wm1959.cfm](http://www.heritage.org/research/healthcare/wm1959.cfm) This is why we waste money on durable goods. You can buy things that medicare provides for a lot less money. There should be a law mandating competitive bidding for every thing the government buys. And so this is in support of item #8. It’s essentially the equipment-side of #3. Unfortunately, and including your article, I haven’t seen anything quantifying this. Saying that we spend double the amount for a hospital bed only matters if European nations pay the halved price and if hospital beds are a significant percentage of all spending. [This paper](http://docs.google.com/gview?a=v&q=cache:Gxmo1jaF4qQJ:www.amsa.org/business/King%2520Paper%2520Medical%2520Device%2520Spending.pdf+medical+supplies+spending&hl=en&gl=us&sig=AFQjCNFmoLHW7pfUzWW-aAbUwpx7PRhR0Q) indicates that spending on “medical devices” is only 6% of all spending (~$360 PPPY). It looks like the UK spends [$132 PPPY](http://www.reuters.com/article/pressRelease/idUS94305+08-May-2009+BW20090508), so we are again spending in excess, but even if we manage to buy cheaper stuff or offset the cost of new technology onto other nations, this only gives us another ~$180. Our current tally: Multiple Private Insurance -\> Single Payer Public = -$700 Pharmaceuticals No Bidder -\> Pharmaceuticals Lowest Bidder = -$200 Supplies No Bidder -\> Supplies Lowest Bidder = -$180 $6000 - $700 - $200 - $180 = $4920 So we still have $1920 to find. ---
**Author:** ![GIGObuster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gigobuster/32/421_2.png) [@GIGObuster](https://boards.straightdope.com/u/GIGObuster)\ **Post date:** [October 4, 2009, 4:59am UTC](https://boards.straightdope.com/t/health-care-where-does-the-money-go/509952/45 "2009-10-04T04:59:21Z")
> [@Sage\_Rat](#): > > About the only thing that article says of any practical value is that the course of the money is labyrinthine, which is itself probably a source of money loss. That is however unquantified and speculative. Assuming it to refer to the excess administration of having many, small insurance providers and corporate profit, _these are both quantified_ And then you go to your numbers, but\*\* that \*\*is becoming the silly part. You are \*\*assuming \*\*and low balling to keep your numbers from ever reaching a destination. (I would be willing to say that getting exact numbers is hard, but I question the idea that therefore we should minimize or ignore the research) I’m beginning to feel that we are like Achilles and the tortoise in a paradox by Zeno. You are hopping that just by not reaching the total that you are making a point, but in reality everybody knows that Achilles reaches the tortoise in real life (Countries that switched to UHC **cover all people** and still pay less per GDP). Likewise, enough has seen by many here and around the world to see what works and what does not. > **[Physician Behavior An Underlying Cause for Health Care Cost Discrepancies in...](https://geiselmed.dartmouth.edu/news/2005_h2/24oct2005_sirovich.shtml)** > > Physician Behavior An Underlying Cause for Health Care Cost Discrepancies in U.S. > **[More Health Care Doesn't Equal Better Health Care or Greater Patient...](https://geiselmed.dartmouth.edu/news/2003_h1/18feb2003_fisher.shtml)** > > More Health Care Doesn't Equal Better Health Care or Greater Patient Satisfaction, Says New Dartmouth Study [http://www.mckinsey.it/idee/mckinsey\_global\_institute/accounting-for-the-cost-of-us-health-care-a-new-look-at-why-americans-spend-more.view](http://www.mckinsey.it/idee/mckinsey_global_institute/accounting-for-the-cost-of-us-health-care-a-new-look-at-why-americans-spend-more.view) [Previous page](https://boards.straightdope.com/t/health-care-where-does-the-money-go/509952.md?page=2)