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Wednesday, September 12, 2007
(9:45 AM) | Stephen:
Where Your Healthcare Dollars Go

Atrios - PhD in economics, remember - points out today that over 30% of all healthcare expenditures in the United States go to administrative costs. This bears repeating, I think: almost 1/3 of every dollar spent for healthcare in this country goes toward keeping records, filing claims and other office work. As Atrios says:
Doing a little trick we like to call "multiplication," when you add in the fact that 16% [of] GDP is spent on health care we learn that close to 5% of our GDP is spent on people pushing little bits of paper back and forth between doctors and insurance companies.
Philip Longman wrote a lengthy, well-researched article for the Washington Monthly about the Veterans Health Administration. The VHA has gone from being one of the worst healthcare systems imaginable to a top performer, consistently delivering high quality, cost-efficient care. The VHA now sees fewer mistakes, more care available and does it for far less money than private insurance. For example:
Between 1999 and 2003, the number of patients enrolled in the VHA system increased by 70 percent, yet funding (not adjusted for inflation) increased by only 41 percent.
Better care at less cost. This is no fluke; it happens all the time. The VHA, Medicare and Medicaid, and every single socialized healthcare system in the world are all able to do this. Every. Single. One.

In systems like the VHA or Medicare, the challenge is to determine the most cost-effective way to deliver services to the people who need them. In the private insurance industry, the challenge is to reduce costs while maximizing profit, and the easiest way to do that is to deny services to the insured. Remember that the next time you get worried about a "government bureaucrat" choosing your doctor or telling you what tests you can have - as if it's just fine when it's a corporate bureaucrat making those decisions for you.

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