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News :: Health |
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Administrative Costs In Market-Driven U.S. Health Care System Far Higher Than In Canada's Single-Payer System, New Research Shows |
Current rating: 0 |
by Public Citizen
(No verified email address) |
21 Aug 2003
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Bureaucracy in the health care system accounts for about a third of total U.S. health care spending - a sum so great that if the United States were to have a national health insurance program, the administrative savings alone would be enough to provide health care coverage for all the uninsured in this country, according to two new studies. |
WASHINGTON - August 20 - Bureaucracy in the health care system accounts for about a third of total U.S. health care spending – a sum so great that if the United States were to have a national health insurance program, the administrative savings alone would be enough to provide health care coverage for all the uninsured in this country, according to two new studies.
The studies illustrate the failure of the private, fragmented and business-oriented U.S. health care system to control administrative costs, as compared to Canada’s single-payer system. One of the studies, in seeking to answer whether the ascendancy of computerization, managed care and more businesslike approaches to health care have decreased administrative costs, answers the question with a resounding "no."
The second study provides a state-by-state breakdown of savings each state could achieve if the United States adopted a national health insurance program.
"Hundreds of billions are squandered each year on health care bureaucracy, more than enough to cover all of the uninsured, pay for full drug coverage for seniors, and upgrade coverage for the tens of millions who are under-insured," said Dr. Steffie Woolhandler, co-founder of Physicians for a National Health Program and lead author of the studies. "Americans spend almost twice as much per capita on health care as Canadians, who have universal coverage and live two years longer. The administrative savings of national health insurance make universal coverage affordable."
New England Journal of Medicine Study Shows U.S. Health Care Paperwork
Cost $294.3 Billion in 1999, Far More Than in Canada
The first study, which is to be published Thursday in The New England Journal of Medicine, finds that health care bureaucracy cost U.S. residents $294.3 billion in 1999. The $1,059 per capita spent on health care administration was more than three times the $307 per capita in paperwork costs under Canada’s national health insurance system. Cutting U.S. health bureaucracy costs to the Canadian level would have saved $209 billion in 1999, researchers found. [The study was conducted with grant support from the Robert Wood Johnson Foundation. The Foundation does not endorse the analyses or findings of this report or those of any other independent research projects for which it provides financial support.] The study, the most comprehensive analysis to date of health administration spending, was conducted by researchers at Harvard Medical School and the Canadian Institute for Health Information, Canada’s quasi-official health statistics agency. The authors analyzed the administrative costs of health insurers, employers’ health benefit programs, hospitals, nursing homes, home care agencies, physicians and other practitioners in the United States and Canada. They used data from regulatory agencies and surveys of doctors, and analyzed Census data and detailed cost reports filed by tens of thousands of health institutions in both nations.
The authors found that bureaucracy accounted for at least 31 percent of total U.S. health spending in 1999 compared to 16.7 percent in Canada. They also found that administration has grown far faster in the United States than in Canada. Between 1969 and 1999, administrative and clerical personnel in the United States grew from 18.2 percent to 27.3 percent of the health work force. In Canada, those personnel grew from 16 percent in 1971 to 19.1 percent in 1996.
Harvard/Public Citizen Report Finds National Health Insurance Would Save $286 Billion on Administration in 2003 - Enough to Cover All Uninsured and Seniors’ Drug Costs
The researchers also released a second report co-authored with Dr. Sidney Wolfe, director of Public Citizen’s Health Research Group. This report, based on data adjusted to reflect estimates of 2003 spending, found that health bureaucracy now consumes at least $399.4 billion annually and that national health insurance could save about $286 billion in administrative costs. This is equivalent to $6,940 for each of the 41.2 million people uninsured in 2001 (the most recent figure available for the uninsured). In addition to providing health coverage for the uninsured, these savings could provide drug coverage for the nation’s seniors.
The researchers found wide variation among states in the potential administrative savings available per uninsured resident. Texas, with 4.96 million uninsured (nearly one in four Texans), could make available $3,925 per uninsured resident if a national health plan were implemented. Massachusetts, which has very high per capita health administrative spending and a relatively low rate of uninsured, could make available $16,453 per uninsured person.
The high U.S. administrative costs can be attributed to three factors. First, private insurers have high overhead in both nations but play a much bigger role in the United States than in Canada. Second, doctors and hospitals in the United States must deal with hundreds of different insurance plans (at least 755 in Seattle alone), each with different coverage and payment rules and referral networks that must be tracked. In Canada, doctors bill a single insurance plan, using a single simple form, and hospitals receive a lump sum budget.
"Only national health insurance can squeeze the bureaucratic waste out of health care and use the money to give patients the care they need," said Dr. David Himmelstein, co-founder of Physicians for a National Health Program and lead author of the studies. "Republicans are pushing to move seniors into HMOs, whose overhead is three times higher than Medicare’s. National health insurance could cover everyone without any increase in costs."
Added Wolfe, "These data should awaken governors and legislators to a fiscally sound and humane way to deal with ballooning budget deficits. Instead of cutting Medicaid and other vital services, officials could expand services by freeing up the $286 billion a year wasted on administrative expenses. In the current economic climate, with unemployment rising, we can ill afford massive waste in health care. Radical surgery to cure our failing health insurance system is sorely needed."
To read statements from Drs. Wolfe and Himmelstein, click here:
http://www.citizen.org/hrg/healthcare/articles.cfm?ID=10299
To read the Public Citizen/Harvard report, click here:
http://www.citizen.org/publications/release.cfm?ID=7271 |
See also:
http://www.citizen.org/
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Comments
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Re: Administrative Costs In Market-Driven U.S. Health Care System Far Higher Than In Canada's Single-Payer System, New Research Shows |
by Observer
(No verified email address) |
Current rating: 0
21 Aug 2003
Modified: 02:02:28 PM |
This is not really the first study to show the higher costs of administrative functions in the US private health care sector. The study is of significance, but should not be over-rated.
The assumption Public Citizen is making by engaging in such a study is that policy makers and the offices they represent are rational entities, and that if enough similar studies are done, the weight of such studies will, somehow, trickle down, and force decision makers to become more actively involved with the development and and actual passage of national-level single payer system. So, Public Citizen's effort may be a nice gesture, but it is more like preaching to the converted than anything else.
The historical truth about the national political organization of the US is that it is irrational, opportunistic, enslaved to the prerogatives of property, and serves the cannibalistic goals of the private market. And in order to reproduce over time these goals, the US political organization has perfected a system of rhetoric that appears to be working very well, and be used extensively to herd the minds of the citizenry to directions commensurate with the conditions of reproduction of both the national political and the national economic organization.
Bottom line: it's not more studies that would propel the decision makers in the US to take the problems of the privately dominated health care system more seriously. What would do the job is raising hell, on the streets, in policy makers offices at the local level, and door to door canvassing and grassroots organizing all across the country--that's what is needed to build a strong people's movement to get a single payer health care system in place. Neither would more coalitions and partnerships, and alliances, etc of professionalized advocacy groups would do the job (Understandably, such efforts are useful to helping professional organizers and the organizations they represent, as well as their consultants, make a living--nothing wrong with that. But as strategy to reach the goal of single payer health care in the US, such a strategy, at best, has proven very limited, if not ineffective.)
Grassroots efforts, and the building of people's movement via door to door canvassing is exactly how Maine, the first US subnational unit, put in place a universal health care system. There is no substitute for anything else.
So nice effort Public Citizen, but so what? Why not organize everybody to raise hell, instead of pontificating from Washington? Have we not seen enough of that lately?
Observer |
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