Oh Canada!

We spend about twice what Canada does on health care administration. In fact, we rank number one in the world! No surprise, I guess. About 30 percent of our health care dollars goes for administration:  

• Out of the $19,000 that U.S. workers and their employers pay for family coverage each year, $5,700 goes for administrative costs.
• For every 10 physicians providing care, almost seven additional people are engaged in billing-related activities.
• Physicians spend about three hours per week dealing with billing-related matters; for each doctor a further 19 hours per week are spent by medical support workers (in doctors’ offices).
• Administrative costs amount to $68,000 per year per physician.

In the U.S., administrative costs are high because of the complexity of our health care system. Most importantly, our health care providers must deal with a multiplicity of payers, including various public health programs plus a host of private insurers, each with its own set of procedures. In Canada, with its tax-funded single-payer system, medical practices spend a fourth of what we do on dealing with payers. (Canadians can buy private insurance for certain services such as dental or home care.)

A particularly big headache for medical practices in the U.S. comes from generating bills and collecting payments. Among other things, our providers must chase down patients for the portions of their bills not covered by insurance. Studies show that, for bills exceeding $200, only 67 percent are paid within a year. As the patients’ out-of-pocket payments increase, providers devote more resources to collecting it.

Single-payer anyone?

For an introduction to this blog, see I Just Say No; for a list of blog topics, click the Topics tab.