One-Fourth Of Your Medical Dollars Disappear Into A Vast Healthcare Bureaucratic Rat Hole

The gibberish that is an overpriced hospital bill would be funny if it didn’t represent the giant waste of money that cripples American healthcare. International research shows that the U.S. squanders more than $1 billion dollars a day on medical bureaucracy, the most in the world.

According to a study coordinated at the City University of New York (CUNY) and the London School of Economics, a full 25 percent of the budget at U.S. hospitals goes for bureaucracy, double what hospitals spend in any other country.

The research shows that administrative costs are lowest (about 12 percent) in Scotland and Canada, where single-payer medical systems fund hospitals in the form of universal, lump-sum budgets, similar to the way U.S. fire departments get their funding.

In the U.S., annual hospital administrative spending now tops $667 per person. In comparison, the same spending comes out to only $158 per person in Canada, $164 in Scotland, $211 in Wales, $225 in England and $325 in the Netherlands. Because of varying methods of accounting, the researchers could not make comparable monetary estimates for Germany or France. But they figure that administrative costs in Germany and France are about 40 percent less than in the U.S.

The analysis pins the U.S. waste of money on two elements of our healthcare system:

  1. We have too many health insurance companies who use different pay scales and require different types of documentations from doctors and hospitals.
  2. In the U.S. system, hospitals have an incentive to maximize profits (nonprofit institutions vie for larger surpluses) to have the money to install new equipment and continually upgrade their facilities.

“We’re squandering $150 billion each year on hospital bureaucracy,” said researcher David Himmelstein, a professor at the CUNY/Hunter College School of Public Health and lecturer at Harvard Medical School. “And $300 billion more is wasted each year on insurance companies’ overhead and the paperwork they inflict on doctors.”

The researchers believe that it will take a single-payer, government-run system to bring down these costs.

Researcher Steffie Woolhandler said: “For three decades our policy makers have pushed market-oriented strategies that have turned health care into a business. As a result, Americans now have the world’s costliest health care, and our life expectancy is years shorter than in most other wealthy nations. It’s time to admit that, when it comes to caring for sick people, markets don’t work.”

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Carl Lowe