Once again we see that the free market isn't always the most efficient way to accomplish something. According to a Reuters article at http://www.reuters.com/newsArticle.jhtml;jsessionid=14V0IE2YMBNIACRBAE0CFFA ?type =healthNews&storyID=3311013 31% of the money spent on health care in the U.S. goes to administrative costs, nearly twice the figure for Canada's single-payer system. 11.7% of that goes to insurance companies for underwriting and advertising costs, compared to 1.3% for Canada's single-payer system and 3.6% for Medicare. The figure does not include drug company or hospital advertising, industry profits, or the value of patients' time spent on paperwork.6 responses total.
Sorry about the long, wrapped URL. Try this one instead: http://tinyurl.com/kqsb
Just to clarify something I just realized I wrote badly -- 11.7% of *all* money spent on health care in the U.S. goes to insurance company administrative costs, not 11.7% of the 31%, though the 31% figure includes that amount. I have to watch how I word things when I'm talking about percentages. ;>
Maybe the Canadians just haven't figured out how to "spread the wealth" yet.
Maybe the oppressive regulations on doctors and insurance companies, coupled with the billions of dollars spent on indigent illegal aliens, might have something to do with it...
Money spent on administration isn't necessarily wasted. If spending $1 on procedure saves $2 elsewhere, you're better off. This is not to say that paper-shuffling is good medicine or good economics, just that the comparison isn't quite so clear.
Some of the money spent on administration is entirely wasted. The doctor I went to for a general physical exam (or someone working there) somehow arranged things so that St. Joe's billed me for a test that I had done at U of M. My first phone call to St. Joe's got me someone who said they had nothing to do with it and call the doctor. A phone call to the doctor (the person who most likely screwed things up) - they have nothing to do with it, call St. Joe's. A third phone call got me someone more willing to take responsibility at St. Joe's who said she would put a special team to work on this problem and write me when it was solved. I can only guess what this is costing St. Joe's to fix someone else's mistake. (They billed me directly instead of the insurance company or PPOM, which counts as a separate mistake, of course, and on top of that they sent the original bill to the house of a friend where I stayed for a month about 20 years ago. It remains a mystery where they got that address for me in their system). At least national health care does not waste time and money on billing, even for services that were actually performed. The bill from St. Joe's did have the doctor's name and address on it. I suspect his accounting person automatically does something involving St. Joe's, but what could it have been?
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