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The Cost of Our Health

A study published this week provides hard facts about the truly bad deal the US is getting for health care. Simply put, the US for-profit health system costs four times as much than Canada’s single-payer system. Even though the two systems provide roughly equivalent results.

Why? Because of a veritable army of administrative workers who play no direct role in providing actual medical care, and the cost of paying dividends to shareholders of insurance companies. These administration expenses add up to an annual cost of $817 billion, which is an average of $2,497 out of the pocket of every American man, woman, and child every single year.

It is bad enough that we pay four times as much for the same thing, but keep in mind that the high cost of US health care is killing people. It also hurts our economy because in the US many of these costs are shouldered by private companies. In my personal experience starting companies and working with other startups, this makes it much harder to start new companies or keep small companies running. And as we all know, small companies are the primary engine of economic growth, providing two-thirds of net new jobs and driving innovation and competitiveness.

Also note that this study did not include the time and energy patients spend dealing with health insurance companies. I primarily live in the US, but I have also lived in three countries that have single-payer systems, and the amount of extra time I have to spend dealing with health insurance companies in the US is staggering.

When people claim that a single-payer system will cost you money, they are simply lying.

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7 Comments

  1. westomoon wrote:

    Thanks for this! Read the linked article, and it turns out the study only looks at one aspect of the costs of for-profit health care.

    Granted, the methodology they chose is clean and simple, hard to challenge. But I found myself contemplating the many other ways in which the adversarial relationship with the many payers affects costs — especially in hospitals, where every single one of those itemized charges includes the costs of the army of admin workers hospitals need to get paid at all.

    Physician group practices often have one or more employees whose primary job is threading the labyrinth of insurance-company denials. The open warfare between insurers and anyone who tries to get them to pay a claim affects every aspect of US medical care, especially its costs.

    Tuesday, January 14, 2020 at 12:52 pm | Permalink
  2. notycoon22 wrote:

    For over a decade, I visited a physician on a (too) regular basis. As we became more familiar with each other, he started sharing information on what it took to run his practice. Almost 1/3 of his personnel costs were directly tied to processing insurance claims. This included staff that were there for only one reason – to deal with the insurance companies. My GP has related a similar tale of woe.

    Tuesday, January 14, 2020 at 1:09 pm | Permalink
  3. Dan wrote:

    I take 8 different prescriptions every morning, and a shot of the 9that night. I have the benefit of whole heath classes, PT, Chiro, Acupuncture, whatever I need.
    All though my free U.S.government healthcare plan though the VA.
    Anyone who says the government can’t do healthcare has never had it. Only when Republicans sabotage the system are there problems.

    Wednesday, January 15, 2020 at 3:15 am | Permalink
  4. Dan wrote:

    The system only works for most Americans when they are destitute.
    Work your entire life to have something to pass on and the merciless healthcare system takes is all.
    Worse then a “death tax”

    Wednesday, January 15, 2020 at 3:18 am | Permalink
  5. James wrote:

    For he life of me, I have NEVER understood why those in favor of a decent health care system in the US never seem to have taken up the benefits to business and competitiveness. This is hitting opponents claims to being “business friendly” square in the nuts.

    Wednesday, January 15, 2020 at 12:10 pm | Permalink
  6. Wildwood wrote:

    We have Medicare coverage through my husbands former employer. Medicare, on it’s own does not cover enough for most people to manage. My only problem with single payer is that. We may be paying more for our insurance, but my out of pocket is relatively low. On Medicare alone, we would be in trouble. A heart surgery is probably at least $75,000 and Medicare would pay 80%. That $15,000 left would put many people in the poor house. And as you must know, the older you get, the more you need coverage. In our lifetime, I have had 11 procedures, (that includes two cataract surgeries which were the most minor of the eleven), my husband has had only four, but two of those were quad bypasses. So I have no idea what would have happened had we not had decent coverage. Right now we could get cheaper coverage by leaving the company plan, but we can never go back if we leave it. And given the current political climate, I don’t intend to change unless I’m forced into it.

    I also know that through the years, my husband passed up job opportunities because they did not give us good health care coverage. The lack of affordable, portable coverage leaves people stuck in jobs that they might no longer want to do. I’ve thought for years that companies should not be allowed to provide health care. They should provide a decent salary and let people buy their own healthcare. By providing it, they control their employees lives to some extent and that means they have a more stable workforce. And if the coverage has to come from the government, so be it. Medicare for all might not be the worst thing that could happen. But I would hope that we could still get coverage for that 20% that Medicare does not cover.

    Wednesday, January 15, 2020 at 4:24 pm | Permalink
  7. ebdoug wrote:

    Why do companies provide health care? Answer: 75 years ago World War II ended. People were in short supply to hire so companies entice them with Health care Insurance. End of story.

    Saturday, January 18, 2020 at 2:58 pm | Permalink

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