I too read it as that the administrative costs were tremendous.
And pointless for a significant share.
We had lots of versions of this debate in 2010.
The “system” in the USA raises total expenditures by spending man-hours, and employing additional staff, on sheer buck-passing–that is, employees whose job is to try to find out who’s paying the bill, and employees whose job is to avoid paying the bill.
If we went to a Canadian-style system, *all those people would lose their jobs, *but health care would be dramatically cheaper, and presumably less difficult and stressful to get for very many more persons. I think it is useful here to recall Bastiat’s observation that the good of the nation’s whole economy is more important than the good of one sector of the economy.
In an earlier UHC thread, a back-of-the-envelope calculation showed that the US should save ~$1T per year by switching to a U.K.-style NHS.
No doubt. But I think proposing an NHS style system for the US is counterproductive as it will never happen. However the idea of a regulated free-market health care provider system as it exists today with major reforms on the insurance side is entirely realistic, and that’s what happened in Canada.
And it’s going to have to be approached in baby steps, of which the ACA is hopefully the first. The end result doesn’t even (necessarily) need to be a single-payer insurance system run by the government. It just needs to be a system where insurance is standardized and charged on a community-rated model – i.e.- where it makes no difference where you buy your insurance because it’s all the same, and it makes no difference what your risk factor is because all rates are the same and (hopefully) geared to income or subsidized. That degree of uniformity is not just enormously simplifying and cost-efficient, it also lays the groundwork for uniformity and cost-control in provider fees. That, in a nutshell, is why every country in the world pays far less for health care than the US does, regardless of the details of how their systems are structured.
That way of thinking seems to be anathema to free-market conservatives where it’s axiomatic that more money = better product. It doesn’t work in health care. Here’s a question for them. If a critically ill person who is very rich is able to get the best health care that medical science is able to provide, WTF is everybody else supposed to get? And how do you reconcile that with living in a civilized society?
Hospital Corporation of America (HCA on NYSE) is currently trading at $69.97/share. This is expected to rise to $88.76 by this time next year … a 26.85% increase. Which UK or Canadian hospital corporation is showing these kinds of returns?
It sounds like a clunky and burdensome way of doing things both for employer and employee. Doesn’t it result in employers trying to do people out of their health care to save money and time ?
Post #40. Eliminating all private insurer profit gets us 1% of the way toward the necessary savings.
Tell me why a government-funded system doesn’t want to save money and time.
Obvs., but don’t you have to reassign the health care, or change the deal, or lose it altogether if you change a job ?
How can you possibly mistake profit for administration costs?
Yeah, I am not so sure of the “baked in” bit. I hear tell of hospital bills that itemize the band-aid they put over where they took your blood sample as something along the lines of a $50 charge. Because, I guess, they had to pay someone to apply it. The realistic cost of care does not have to be that insane. I suspect it is being driven up by insurance companies, which reject or dicker down claims, forcing hospitals to over-bill so that their actual costs are covered. Then there are things like IP royalties on equipment, malpractice insurance, and the losses related to treating uninsured, indigent patients. There seems to be a lot of money flowing through the healthcare system that does not really seem to improve anything or add any value. I suspect there is a lot of room to reduce the costs.
At this point, I have to wonder whether you’ve just been reading too much insurance industry propaganda, or whether you actually write the stuff. You’ve certainly ignored all the contrary evidence presented.
The reality is that it’s not the profits of the insurance industry that is the single culprit, nor even all their own employees combined. It’s the entire system of treating essential human health care like a commercial laundry appliance that is the problem – the system that says that instead of simply getting health care when you need it, under a uniform system supported by principles of responsible common social values, it has to be rated by risk and adjudicated on a case by case basis, just like car insurance. It’s almost incalculable how much that costs to do, and how much essential health care it prevents people from getting when they need it.
Which is perfectly fine if you think that a human being is just like a car that should be junked when the cost of repairs gets to be a damn nuisance – strictly a mathematical calculation. And it’s perfectly fine if you don’t mind paying twice as much to run a system with that callous and idiotic premise. For the rest of us, it’s not fine at all.
Why single out doctors and hospitals? I think it’s very likely that the extra cost of the American health care system comes form somewhere outside of the places where actual health care is going on. But as I said, I’m not going to argue over the details. I’m just pointing out I’m not talking about some hypothetical. Places like Canada and Europe are not fictional - they have existing health care systems that cost less than ours. I don’t see any reason why we can’t duplicate what they’re already doing.
And you forgot insurance companies, who would still be making zillions of dollars in profit…wait.
Don’t have Canadian numbers, but making the most generous assumptions possible the US spends twice as much on administrative costs as a moderately well-run single-payer system:
If the total administrative cost of the US system is 400 billion. Medicare costs a little over 500$ a person to administrate. If covering the entire 300 million people that means administrative costs for the entire population to have access to medicare would cost 150 billion dollars to administer.
Thus using the most generous numbers means a saving of 250 billion dollars. That is 14% of the needed 1.7 trillion dollars. That leaves 86%, or 1.45 trillion dollars, of the savings to be covered by cuts to providers or less healthcare provided.
That is not even to mention the deadweight loss of increasing taxes by 1.7 trillion. That cost is probably in the 300 billion dollar range.
Even if we accept straight linear multiples like that (which we shouldn’t - we don’t necessarily need twice as many computers or office space to administer health care for twice as many people) 14% is a pretty damn good savings.
This is post 40:
It is not talking about administrative costs, but profits. Profits is what you have left when you’ve paid all your costs, and in most industries, costs are many, many times larger than profits.
Well, no.
This is why I wrote “I don’t think you two understand where the US extra costs originate. You both seem to assume that the US system already operates at the same cost efficiency as the other nations systems. That is very far from the truth I am afraid.”
The US system is very different from other systems, and includes many large layers of work that is simply absent on other systems. Medicare may have less of these expenses, but are not free of them.
First off, the administrative costs of Medicare are not *"over 500 per person"*. They are about 160 per person. You only get the 500+ number if you include all the administrative costs of the insurance companies participating in Medicare C and D (Reference; Journal of Health Politics, Policy and Law, February 15, 2013, Kip Sullivan)
Second, all aspects of Medicare are more resource-consuming per person than what you’d get when covering the entire population, because Medicare currently covers old people. Who have far more medical issues than young people on the average, and need more medical care, more frequently. Total medical resource use by over -65s is about 400 % of that of under -65s.
Third, I believe a lot of Medicare current administrative expenses are still tied up in dealing with other insurers, negotiating with hospitals, negotiating, billing etc. Most of the whole rigmarole. In a single payer scenario, most of this would be gone.
Whats more, if you got the administrative costs under control, that does not mean that the rest of the savings is “to be covered by cuts to providers or less healthcare.”
Then, you can start on the medical waste and inefficiency in the system itself. The profitable procedures that does not improve outcomes, the duplication of work and staff, the extra prescriptions etc, etc. Its almost as big as the adminstrative waste.
And after that, the health care insurance industry. And then defensive medicine.
This makes no sense at all.
As Grim Render’s post indicates, the vast majority of the administrative disparity is caused by the sheer number of payors in the US system. The fundamental cost savings of the NHS is that it doesn’t have to spend time asking itself - or even fighting with itself - over whether it owes itself a portion of a given bill.
Eligibility and contribution determinations and litigation consume a huge portion of CMS’ budget. Medicare compliance is a huge portion of private insurers’ budgets. If you remove that, the administration budget drops substantially.
Presumably you’re not of the opinion that the US government is inherently less efficient than the UK government (especially since all NHS issues are handled at the national level, rather than locally - we know conservatives hate centralized government!)
This is all hand waving. Medicare C and D administrative costs still count as administrative. Medicare would still need to negotiate with hospitals, providers, and doctors about what to cover and for how much. You still need compliance people especially to deal with fraud, which is already estimated at 100 billion per year.
Why do we have to wait to start on the medical waste and inefficiency in the system until all of the healthcare industry has been taken over by the government? We already have a huge amount of government healthcare through medicaid, medicare, and the VA. That is the government that would implement any expansion, not a bunch of Canadian bureaucrats. If getting rid or waste and inefficiency were a priority of the government it would already be doing so. At least in the private sector getting rid of inefficiency could lead to more profit. However, governmental health care is mostly concerned with special interests getting as much much funneled to them as possible. Witness the Sandra Fluke where not paying the birth control costs of college students was branded a war on women. That is the government we have and the one you want decided who gets healthcare and how much is spent on them.
I am of the opinion that the US government is inherently less efficient than the UK government. Governing 300 million people of the most diverse country in the world is alot harder than governing 64 million people in a place half the size of California. Plus the UK has over 50 years experience in administrating healthcare to the entire country. The parliamentary system also makes it easier to get things done.