What do these costs mean for individuals?
- Overall, health administration cost each person in the U.S. $2,479 vs. $551 per person in Canada.
- Americans spent $844 per person on insurers' overhead while Canadians spent $146.
- Due to the complexity of billing multiple payers, hospital administration cost Americans $933 per capita vs. $196 in Canada, which funds hospitals through global budgets.
- Physicians' billing costs were also much higher in the U.S., at $465 per capita vs. $87 in Canada.
We also found that administrative costs continue to rise, as measured both by how many dollars are spent and by their share of overall health expenditures. Between 1999 and 2017 the share of overall health spending devoted to administration rose by 3.2 percentage points, from 31.0% to 34.2%. Most of that increase (2.4 percentage points) was due to the expanding role of private insurers in tax-funded programs such as Medicaid and Medicare. For example, private Medicare Advantage plans — which have grown to enroll more than one-third of Medicare recipients — take 12% or more of premiums for their overhead, while traditional Medicare's overhead is just 2%, a difference of at least $1,155 per enrollee per year. Americans spend twice as much per-person as Canadians for our health system. In return, we get extraordinary corporate profits, eight-figure executive salaries, and mountains of insurance paperwork. By switching to single-payer Medicare for All, we could redirect $600 billion per year in administrative costs towards patient care, enough to cover everyone for all medically necessary care without copays or deductibles. Several major news outlets reported these findings, including:
Solving America’s prescription drug affordability crisis While Canada offers a useful model for universal coverage under a single-payer system, the Veterans Health Administration provides a useful model to address our prescription drug crisis. In another new study published yesterday in Health Affairs, we (along with lead-author Dr. Adam Gaffney and other colleagues at the Cambridge Health Alliance/Harvard Medical School) found that VA patients are less likely than Americans with other of types insurance to go without needed medications, skip doses, or delay filling prescriptions because they are unable to afford them. Although VA enrollees were older, sicker, and poorer than other insured Americans, fewer (6.1% of enrollees) reported that costs caused them to go without any medication in the course of a year, compared to 10.9% of non-VA patients. The differences were even larger among patients with serious conditions like heart disease (6.1% vs. 14.4%) and chronic lung disease (6.4% vs. 19.9%). VA enrollees are more likely to adhere to medication because they pay at most $11 per prescription, and often less. The VA can afford to provide prescriptions to veterans with such low cost-sharing because it lowers drug acquisition prices using a combination of regulations, negotiations with drug companies, and a national formulary. While low cost-sharing benefits all VA enrollees, we found it was especially beneficial for minority veterans and those with lower incomes. We cannot achieve these results with incremental reforms like a public option. Only Medicare for All has the power to reduce health spending and improve health outcomes. For more details on how single payer could solve our drug pricing crisis, see PNHP’s prescription for pharmaceutical reform at pnhp.org/pharma. Doctors prescribe Medicare for All Please share these studies with your colleagues, and encourage them to add their signature to an open letter from physicians recommending improved Medicare for All. At such a critical time in the health care debate, we need to show the public that doctors are united in our demand for an efficient and just health care system. Sincerely, Steffie Woolhandler, M.D., M.P.H. and David U. Himmelstein, M.D.
PNHP co-founders |
