Friday February 21, 2020

Over One Third of Healthcare Costs in the U.S. Goes to Bureaucracy: Study

U.S. insurers and providers spent more than $800 billion in 2017 on administration, or nearly $2,500 per person

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Healthcare
The reason why administrative costs in U.S.A are so high are because the insurance companies and healthcare providers are engaged in a tug of war. Pixabay

U.S. insurers and providers spent more than $800 billion in 2017 on administration, or nearly $2,500 per person — more than four times the per-capita administrative costs in Canada’s single-payer system, a new study finds.

Over one third of all healthcare costs in the U.S. were due to insurance company overhead and provider time spent on billing, versus about 17% spent on administration in Canada, researchers reported in Annals of Internal Medicine.

Cutting U.S. administrative costs to the $550 per capita (in 2017 U.S. dollars) level in Canada could save more than $600 billion, the researchers say.

“The average American is paying more than $2,000 a year for useless bureaucracy,” said lead author Dr. David Himmelstein, a distinguished professor of public health at the City University of New York at Hunter College in New York City and a lecturer at Harvard Medical School in Boston.

Healthcare costs
Over one third of all healthcare costs in the U.S. were due to insurance company overhead and provider time spent on billing. Pixabay

“That money could be spent for care if we had a ‘Medicare for all program’,” Himmelstein said.

To calculate the difference in administrative costs between the U.S. and Canadian systems, Himmelstein and colleagues examined Medicare filings made by hospitals and nursing homes.

For physicians, the researchers used information from surveys and census data on employment and wages to estimate costs. The Canadian data came from the Canadian Institute for Health Information and an insurance trade association.

United States vs. Canada

When the researchers broke down the 2017 per-capita health administration costs in both countries, they found that insurer overhead accounted for $844 in the U.S. versus $146 in Canada; hospital administration was $933 versus $196; nursing home, home care and hospice administration was $255 versus $123; and physicians’ insurance-related costs were $465 versus $87 They also found there had been a 3.2% increase in U.S. administrative costs since 1999, most of which was ascribed to the expansion of Medicare and Medicaid managed-care plans.

Overhead of private Medicare Advantage plans, which now cover about a third of Medicare enrollees, is six-fold higher than traditional Medicare (12.3% versus 2%), they report. That 2% is comparable to the overhead in the Canadian system.

Why are administrative costs so high in the U.S.?

It’s because the insurance companies and health care providers are engaged in a tug of war, each trying in its own way to game the system, Himmelstein said. How a patient’s treatment is coded can make a huge difference in the amount insurance companies pay. For example, Hammerstein said, if a patient comes in because of heart failure and the visit is coded as an acute exacerbation of the condition, the payment is significantly higher than if the visit is simply coded as heart failure.

More and more paperwork required

“It’s clear that healthcare costs in the U.S. have soared,” said Dr. Albert Wu, an internist and professor of health policy and management. VOA

This upcoding of patient visits has led insurance companies to require more and more paperwork backing up each diagnosis, Himmelstein said. The result is more hours that healthcare providers need to put in to deal with billing.

“(One study) looked at how many characters were included in an average physician’s note in the U.S. and in other countries,” Himmelstein pointed out. “Notes from U.S. physicians were four times longer to meet the bureaucratic requirements of the payment system.”

The new study is “the first analysis of administrative costs in the U.S. and Canada in almost 20 years,” said Dr. Albert Wu, an internist and professor of health policy and management at the Johns Hopkins School of Public Health in Baltimore. “It’s an important paper.”

‘Inefficient and wasteful’  system

“It’s clear that health costs in the U.S. have soared,” Wu said. “We’re paying for an inefficient and wasteful fee-for-services system.”

Also Read- We Got Trump Elected, Shouldn’t Stop Him in 2020; Says Facebook Executive

“Some folks estimate that the U.S. would save $628 billion if administrative costs were as low as they are in Canada,” said Jamie Daw, an assistant professor of health policy and management at Columbia University’s Mailman School of Public Health in New York City.

“That’s a staggering amount,” Daw said in an email. “It’s more than enough to pay for all of Medicaid spending or nearly enough to cover all out-of-pocket and prescription drug spending by Americans.” (VOA)

Next Story

Australian Road Trips: How to Save Money on Car Rentals, Insurance and Parking

Find out ways to save expenditure on car rentals, insurances and taxes in Australia

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If you plan on spending your next vacation in Australia, you need as much money as you can gather; you should start by saving money on car rentals, insurance, and packing. Pixabay

Taking a road trip within Australia is a good way to unwind, the beautiful country has a lot of places to visit. If you plan on spending your next vacation there, you need as much money as you can gather; you should start by saving money on car rentals, insurance, and packing.

Additional expenses like car rental, insurance, and packing fees can consume a big chunk from your vacation budget; if you are new in the country or a novice in renting cars, car hire companies will not hesitate to rip you off. For instance, you may end up buying Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW) when an existing policy already covers you. That’s why this article contains a guide to help you save money on car rentals, insurance and packing while taking a road trip in Australia. 

Car rentals
Additional expenses like car rentals, insurance, and packing fees can consume a big chunk from your vacation budget. Pixabay

How to Save Money on Car Rentals

Using public transportation for your road trip may seem more affordable, but it comes with a lot of hitches, this makes renting a car essential, despite the cost, you can save money on car rentals, here are some useful tips:

Compare Offers from Different Car Hiring Companies

Before you hire a car in Australia, you should have different options, make comparisons then go for the most favorable offer. Don’t just settle for popular companies; you’ll be surprised to see other cars hire companies with better offers.

Request Discounts

Most times car hiring companies offer discounts, if you utilize these discounts well, you will be able to save a few dollars. Whether you are booking online or from the desk, always make inquiries about discounts.

Go for Economic or Smaller Cars

Driving a Porsche while on a road trip doesn’t mean you’ll have more fun than when you drive a Toyota, what matters most are the places you can visit, the people you meet and the food you eat. So, there’s no need to drive a luxurious car on a road trip. If you want to reduce your expenses, you should stick with economical vehicles, and if you are going alone or with a single partner, the small-sized car will suit your needs.

Avoid Airport Pickup

It’s always more expensive when picking up a hired car directly from the airport, if you want to minimize your expenses, consider scheduling pickup elsewhere, preferably within the city or close to your hotel.

Car rentals
Using free parking spaces is an excellent way to reduce the amount you will spend on parking. Pixabay

How to Save Money on Car Rental Insurance

Buying a car insurance policy for your rental car is essential, but it becomes a waste if you are already insured. Most times, our personnel car insurance, travel insurance policy, and even Credit cards cover us for most of the insurance policies car rental companies are offering.

Car hiring companies will use different methods to convince you to buy their policies; if you are already covered, don’t give in, be firm in rejection of their offer. Car rental excess waiver insurance policy and daily car hire excess insurance are great alternatives for the Collision Damage Waiver and Loss Damage Waiver that are offered by most insurance companies because they are more affordable. This will help you save money while on the road trip.

Although avoiding additional issuance will indeed help you save funds, it is risky and can drain your funds. So you have to be careful, make sure you do thorough research on your existing policy and find out what you are covered for. If your current insurance policy doesn’t cover you adequately, Car rental excess insurance policy and daily car hire excess will come in handy. 

How to Save Money on Parking

Parking your rental vehicle is an additional expense when on a road trip, the cost of parking in Australia varies; parking within metropolitan cities is more expensive than other cities.

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Using free parking spaces is an excellent way to reduce the amount you will spend on parking. However, be cautious and don’t stay beyond the amount of time you are allowed to park. If you can’t find a free parking space, look for the most affordable space close to your destination (with the help of directories) or book in advance to get discounts. 

Renting someone’s garage is another great way to save money on parking, don’t be surprised, Australians are willing to rent out their private garage for a more affordable price. Finally, avoid parking your car at a prime location. For instance, if you are going to the beach, park your car around and trek to the beach.