Newspapers / Meredith College Student Newspaper / Jan. 21, 2004, edition 1 / Page 3
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3 CAMPUS NEWS Spendin q Per Capit ‘a, U.S. $ U.S. CANADA Cost category 259 47 Insurance administration 57 8 Employers* health BENEFITS administration 315 103 Hospital administration 62 29 Practitioners' overhead/billing expense 324 107 Home care administration 42 13 TOTAL 1059 307 NUMBER Of ENROLi£ES AND EMPLGfYEES OF SELfCTED MAJOR US. PRIVATE HEALTH INSURERS AND CANADIAN PROVlNCtAL HEALTH PLANS, 2001 Plan Name Enrollees Emohvees Bnployeesper laOOOEnnoffees Aetna 17,170,000 35,700 20.8 Anthem 7,883.000 14,800 18.8 Cigna 14,300,000 44,600 31.2 Humana 6,436,800 14,500 22.5 Mid Atlantic Medical Services 1.832.400 2.571 14 Oxford 1.490.600 3.400 22.8 PacifiCare 3,388,100 6,200 24.2 United Health Group 16,540.000 30,000 18.1 WellPoint 10,146,945 13,900 13.7 Saskatchewan Health 1.021.288 145 1.4 Ontario Health Insurance Plan 11,742.672 1,433 1.2 Graph Infoimation courtesy ol Woolhandler S, Campbell T, artd Himnielstein OU. 'Costs of HeatUi Care AcMnlnistration tn the United States and Canada: Micfomanagament, Macro Cmta", Inismatlonal Journal of Health Servlcas, 34:1,65-78,2004. Health cont. from Page 1 North Carolina, with 1.16 million uninsured, could save a total of $7.47 bilJion a year under NUI, which would make avail* able $6,403 per uninsured resident per year. Texas, with 4.96 million uninsured (nearly one in four Texans), could save a total of $19.5 billion a year on adminis tration under NHI, which would make available $3,925 per uninsured resi-, dent per year. California, with 6.7 million uninsured, could save a total of $33.7 billion a year, which would make available $5,016 per uninsured person. {See accompanying chart for details on other states.) Last week, the govern ment reported that health spending accounts for a record 15 percent of the nation's economy and that health care spending shot Tip-bjr^ percent in 2002. Insurance overhead (one component of administra tive costs) rose by a whop ping 16.8% in 2002, after a 12.5% increase in 2001, making it the fastest grow ing component of health expenditure over the past three years. Hence the fig ures in the Harvard/Public Citizen Report (which was completed before release of these latest government fig ures) may understate true administrative costs. The authors of the International Journal of Health Services study attributed the high U.S. administrative costs to three factors. First, private insurers have high over head in both nations but play a much bigger roie in the United States. Second, The United States frag mented payment system drives up administrative costs for doctors and hospi tals, who must deal with hundreds of different insiu"- ance plans (for example, at least 755 in Seattle alone), each with different cover age and payment rules, referral networks, etc. In Canada, doctors bill a sin gle insurance plan, using a single simple form, and hospitals receive a lump sum budget, much as a fire department is paid in the United States. Finally, the increasing business orienta tion of U.S. hospitals and insurers has expanded bureaucracy. The Medicare drug bill that Congress passed last month will only increase bureaucratic spending because it will funnel lai^e amounts of public money through private insurance plans with high overhead. The recent Medicare bill means a huge increase in administrative waste and a big payoff for the AARP, said smdy author Dr. David Himmeistein, an associate professor of medicine at Harvard and former staff physician at Public Citizen's Health Research Group. At present. Medicare's overhead is less than 4 percent. But all of the new Medicare money $400 billion wnll flow through private insurance plans whose overhead aver ages 12 percent. So insur ance companies will gain $36 billion from this bill.A And the AARP stands to make billions from the 4 percent cut it receives from the policies sold to its members. Dr. Steffie Woolhandler, a study author, associate professor of medicine at Harvard and a founder of Physicians for a National Health Program, said hun dreds of billiotis are squan dered each year on health care bureaucracy, more than enough to cover all of the uninsured, pay for full drug coverage for seniors and upgrade coverage for the tens of millions who are underinsured. U.S. con sumers spend almost twice as much per capita on health care as Canadians who have universal cover age and live two years longer. TTie administrative savings of national health insurance make universal coverage affordable. Dr. Sidney Wolfe, direc tor of Public Citizen's Health Research Group added: These data should awaken governors and leg islators to a fiscally sound and humane way to deal with ballooning budget deficits. Instead of cutting Medicaid and other vital services, officials could expand services by freeing up the $286 billion a year wasted on administrative expenses. In the current economic climate, with unemployment rising, we can ill afford massive waste in health care. Radical sur gery to cure our failing health insurance system is sorely needed. Dr. Himmeistein described the real-world meaning of the difference in administration between the United States and Canada by comparing hos pitals in the two nations. Several years ago, he visit ed Toronto General Hospital, a 900-bed tertiary care center that offered an extensive array of high-tech procedures, and searched for the billing office. It was hard to fmd, though; it con sisted of a handful of peo ple in the basement whose main job was to send bills to U.S. patients who had come across the border. Canadian hospitals do not bill individual patients for their care and so have no need to keep track of who receives each Band-Aid or an aspirin. U.S. doctors face a simi lar billing nightmare, Himmeistein said. They deal with hundreds of plans, each with different rules and regulations, each allowing physicians to pre scribe a different group of medications, each dictating that doctors refer patients to different specialists. The U.S. system is a paperwork nightmare for doctors and patients, and wastes hundreds of billions of dollars.
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