The one thing that has been lacking in the “Medicare for All” debate is a quantifiable reason for such a major overhaul of our health care system.
We’ve all heard the rhetoric from the current crop of Democratic candidates. How moving to a single-payor system would benefit all of us with lower deductibles, lower co-pays and lower prescription costs. For the most part it was only hyperbole, using catch phrases and pandering to the electorate.
Of course the biggest question is how we are going to pay for it.
So far the answer has been to tax the “1 percenters” and let the ultra-rich pay. Certainly sells to the peanut gallery. But now there’s a report published in the Annals of Internal Medicine that actually shows why single-payer systems work.
The answer: They save money — plain and simple.
Actually, it’s the first comprehensive study done in more than 20 years that looks at the true administrative cost of health insurance.
Comparing the U.S. system to Canada, U.S. health insurers and providers spent $812 billion on administration in 2017. Not on paying for benefits for their insured, but on administration. Administration accounted for more than one-third of our national health expenditures. Canada spends 17 percent, under its single-payor system, on administration. We spend double that amount — which translates into nearly $2,500 per person for administration cost only.
The study found that the U.S. could have saved $600 billion in 2017 if we just cut administrative costs to match Canada’s.
According to Dr. David Himmelstein, a professor at the CUNY School of Public Health at Hunter College and co-author of the study, “The difference between Canada and the U.S. is enough to not only cover all the uninsured but also eliminate all the copayments and deductibles, and to amp up home care for the elderly and disabled and frankly to have money left over.”
He goes on to say that “The gap in health administrative spending between the United States and Canada is large and widening, and it apparently reflects the inefficiencies of the U.S. private insurance-based, multipayer system. The prices that U.S medical providers charge incorporate a hidden surcharge to cover their costly administrative burden.”
Did you know that there are more than 900 health insurance companies that offer health coverage in the U.S.?
The big five — Anthem, UnitedHealthcare, Humana, Health Care Service Corp and CVS — control more than 38 percent of the market. That’s a lot of people pushing lots of paper in a lot of different directions. Ask your own doctor which is the biggest department their office has, and I’d bet it’s their billing department.
The study looked at administrative costs from 1999 to 2017 and found that it increased 3.2 percent as a share of overall health spending. Of that, 2.4 percent of the increase can be directly attributed to the private sector and the role they’ve assumed in Medicare and Medicaid.
Of course not everyone agrees with Dr. Himmelstein. After the study came out, a spokesperson for AHIP (America’s Health Insurance Plans) the health industries lobbying organization, said: “study after study continues to demonstrate the value of innovative solutions brought by the free market. In Head-to-Head comparisons, the free market continues to be more efficient than government-run systems.”
Not exactly sure about that, or which studies they’re citing. I’d bet they were their own, or those underwritten by the health insurance industry.
What Dr. Himmelstein has done is give boosters of Medicare for All some actual facts and figures that show, over a 20-year stretch, that private insurance costs more to administer than a single-payor system.
“It’s actually the data that guided us to the solution, the solution didn’t give rise to the data,” Himmelstein said.
Will it be enough to sway enough voters to choose the candidate who is champion the cause? Time will tell.
But one thing is for sure: Armed with this study, those in favor of a single-payor system have more than just rhetoric to fuel the fires for change.