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* Reuters…
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.
* From the study…
U.S. insurers and providers spent $812 billion on administration, amounting to $2497 per capita (34.2% of national health expenditures) versus $551 per capita (17.0%) in Canada: $844 versus $146 on insurers’ overhead; $933 versus $196 for hospital administration; $255 versus $123 for nursing home, home care, and hospice administration; and $465 versus $87 for physicians’ insurance-related costs. Of the 3.2–percentage point increase in administration’s share of U.S. health expenditures since 1999, 2.4 percentage points was due to growth in private insurers’ overhead, mostly because of high overhead in their Medicare and Medicaid managed-care plans.
* Related…
* Molina to buy NextLevel Health - The California-based health insurer is paying about $50 million for the Chicago-based Medicaid managed care plan
posted by Rich Miller
Tuesday, Jan 7, 20 @ 10:00 am
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A big part of that administrative cost is “billing.”
We spend more than any other country on health care and we still can’t get everyone the care they need.
Comment by 47th Ward Tuesday, Jan 7, 20 @ 10:04 am
This is not surprising news to anyone who has tried to track charges, insurance adjustments, reimbursements, and payments for any moderately complicated medical procedure. I’m not sure you could design a more complicated process!
Comment by Out Here In The Middle Tuesday, Jan 7, 20 @ 10:06 am
We may not lead the world in health care quality, but we’re certainly out in front when it comes to “administration.”
Comment by Pundent Tuesday, Jan 7, 20 @ 10:14 am
We’re rich enough to give everyone in the US health care. We can and should do it.
Comment by Anon E Moose Tuesday, Jan 7, 20 @ 10:15 am
More rules will fix this!
Comment by Shemp Tuesday, Jan 7, 20 @ 10:16 am
Anon E Moose. Certainly. What’s another trillion a year in ious gonna hurt.
Comment by Blue Dog Dem Tuesday, Jan 7, 20 @ 10:22 am
Administrative overhead is the case in the cosst of most bureaucracies. Computers/internet should have cut that cost dramatically, but instead they seem to be growing. UGH
Comment by Just a Citizen Tuesday, Jan 7, 20 @ 10:28 am
=This is not surprising news to anyone who has tried to track charges, insurance adjustments, reimbursements, and payments for any moderately complicated medical procedure. I’m not sure you could design a more complicated process!=
Amen, It is insane.
Comment by JS Mill Tuesday, Jan 7, 20 @ 10:29 am
Not remotely surprising to anyone who has had to fight to get claims paid by our insurance companies. An incredible waste.
Comment by Chicago Cynic Tuesday, Jan 7, 20 @ 10:30 am
The solution to this is:
-2-party decisions (doctor/patient),
-price transparency,
-indemnity only, and
-certain beneficial considerations for those with income and pre-existing condition constraints.
Illinois could fix half of this, this session, and be a national leader.
Try to do any of that and you’ll see very quickly who’s in charge and why the costs are so obnoxious.
Comment by cdog Tuesday, Jan 7, 20 @ 10:33 am
Blue, defense spending for this year alone is projected at $956 billion. You want to find a place to look for some of that money? Have the “master negotiator” get us a better deal with Lockheed and the like.
Comment by Fixer Tuesday, Jan 7, 20 @ 10:34 am
I look forward to this “useless bureaucracy” becoming more useless, less efficient, and more expensive if the US went single payer. The one thing government is consistent with, is that when it gets involved, things get more expensive and less efficient.
Comment by Just Another Anon Tuesday, Jan 7, 20 @ 10:50 am
The reason we have 5x the overhead is because we as a people have allowed it. If nothing else, these types of studies,the push for M4A in our country, and price caps on drugs here in Illinois have shown that short term profit seeking in healthcare is a losing bet based on lies for everyone except the capitalists at the top who profit from it directly.
Comment by Lakefront DSA Tuesday, Jan 7, 20 @ 11:04 am
cdog and Just Another Anon take polar positions, for and against a government system. Anyone helping a parent navigate Medicare options quickly notices that the big private insurers running Medicare Advantage plans offer more competitive pricing, and more options, than the traditional Medicare program does.
Choose Medicare and you have no dental, no vision, and you have to buy a supplemental policy — from a private company! — to cover co-pays, etc. Meanwhile the menu of Medicare Advantage options can include dental vision and in many states even includes health club memberships. The Advantage plans run more efficiently. Which probably explains why an increasing number of people are choosing the private-sector option over the public-sector option.
Comment by Moody's Blues Tuesday, Jan 7, 20 @ 11:09 am
@Just Another Anon
I think if you look at actual numbers, instead of ideology, you will find that Medicare is far more efficient than any insurance company.
Comment by Streamwood Retiree Tuesday, Jan 7, 20 @ 11:10 am
Just Another Anon, it’s always good to educate yourself before speaking. Canada, with 1/5 the administrative cost of the US according to the study, has a single payer system, so your assertion that single payer would increase costs is fairly baseless. Even in the US, when comparing overhead between state run healthcare and Managed Care Medicaid/Medicare Advantage, the study found that managed care was more expensive.
Comment by Perrid Tuesday, Jan 7, 20 @ 11:15 am
At what point do we have the awkward conversation that the medical billing workforce is primarily female?
Comment by City Zen Tuesday, Jan 7, 20 @ 11:16 am
== At what point do we have the awkward conversation that the medical billing workforce is primarily female?==
I don’t follow. Maybe say what you have in mind?
Comment by Da Big Bad Wolf Tuesday, Jan 7, 20 @ 11:29 am
If we get Canada’s single-payer system, will we also get Canada’s tort system?
One might also mention that there’s a lot more fraud in Medicare and Medicaid then in private insurance. Some of that overhead is the reason.
Comment by Fav human Tuesday, Jan 7, 20 @ 11:49 am
“provider time spent on billing,” Perhaps a single-payer system would reduce that amount significantly?
Comment by Skeptic Tuesday, Jan 7, 20 @ 11:57 am
==800 billion in 2017 on administration==
34% is a heck of a lot of skim. Even the mafia tries to stay below 30% for ‘protection’.
Comment by Jocko Tuesday, Jan 7, 20 @ 11:58 am
- One might also mention that there’s a lot more fraud in Medicare and Medicaid then in private insurance. Some of that overhead is the reason. -
One might say that, but they’d be sharing complete BS that they didn’t bother researching.
https://www.propublica.org/article/we-asked-prosecutors-if-health-insurance-companies-care-about-fraud-they-laughed-at-us
Comment by Excitable Boy Tuesday, Jan 7, 20 @ 12:22 pm
===What’s another trillion a year in ious gonna hurt.===
So are you suggesting that we roll back the Trump cuts? Or eliminate taxpayer funded education?
Comment by thechampaignlife Tuesday, Jan 7, 20 @ 12:45 pm
Neither. Just keep spending. It’s just make believe money anyway.
Comment by Blue Dog Dem Tuesday, Jan 7, 20 @ 1:02 pm
===It’s just make believe money anyway.===
Aren’t you on Medicare? Why does your doctor let you pay with make believe money? Is that a downstate thing?
Comment by 47th Ward Tuesday, Jan 7, 20 @ 1:31 pm
==If we get Canada’s single-payer system, will we also get Canada’s tort system?==
Several states have tried ‘tort reform’ (read: limiting doctor and corp liability). It doesn’t drive down medical costs.
==One might also mention that there’s a lot more fraud in Medicare and Medicaid then in private insurance. Some of that overhead is the reason.==
One would be better to mention that this is flatly untrue. *Maybe* in terms of raw total dollars just given the size, but as a percentage, it’s much much lower.
Comment by brickle Tuesday, Jan 7, 20 @ 1:51 pm
Medicare Advantage plans I checked into were so “efficient” that they listed doctors and medical practice groups who not only weren’t accepting the MA plan, but listed my primary care doctor despite being notified that he and the practice group wanted the MA plan to STOP listing them (banned punct.). My podiatrist and his group were also listed as accepting plans they did not accept. The racket will end when Congress puts patients before profit (I’m not holding my breath).
Comment by revvedup Tuesday, Jan 7, 20 @ 3:23 pm
== My podiatrist and his group were also listed as accepting plans they did not accept.==
Yeah and the white pages have phone numbers that are no longer in service. Things are rough all over.
Comment by Da Big Bad Wolf Tuesday, Jan 7, 20 @ 4:14 pm
=Just keep spending. It’s just make believe money anyway.=
You do realize that this is part and parcel of the “Trump Economy” that you keep touting.
Comment by Pundent Tuesday, Jan 7, 20 @ 5:57 pm
The US healthcare system is just a big makework scheme. What would we do with all those employees who manage insurance for the providers and all those employees who work for the insurance company denying payments? There would be a flood of unemployed people if we were to change to a more efficient system.
Comment by Da Big Bad Wolf Wednesday, Jan 8, 20 @ 6:52 am