The primary reason that the US needs health care reform is that we pay more for health care than any other country in the world; yet our health outcomes are below that of other western nations.(1) Our health outcomes are suboptimal because millions of Americans have limited access to ongoing primary and preventive care because they can’t afford our health insurance.
Reducing Administrative Costs
We spend more than a third of our health care dollars on overhead and administration: billing, advertising, profits, and bonuses for health care executives.(2, 3) Administrative costs in countries such as Canada that have a single payer (non-profit national health insurance) are half as much as in the US.(2) If we had a single payer instead of hundreds of insurers with thousands of different plans, we would save 15% of our health care costs. Fifteen per cent of trillions adds up!
A Price Waterhouse Coopers study reported that our complex, fragmented health care delivery system wastes $210 billion per year on unnecessary billing and administrative costs.(4) The ultimate solution to our excessive health care costs is national health insurance: Medicare for all(5); but that won’t happen–at least not in the very near future. What can we do to decrease health care costs now?
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— James E. Dalen, MD, MPH
This article originally appeared in the March 2010 issue of The American Journal of Medicine.
