Let's talk about facts this election - Part III - Health Insurance

I'm Canadian. Back when I lived in Canada, health insurance was never a worry. Sure you might have to wait a bit before you got it, but you could always count on being sen by a doctor when ever something is wrong. If you want you can get additional health insurance that will pay for upgrades, but almost all Canadians will never let go of Universal Healthcare. But what is the situation down here in my adopted land? (I've lived in the US for ten years) The Democrats want to change things, they recognize that the system is broken. In contrast the GOP claims that the status quo is just fine, that the free market will solve all of our problems, but the numbers tell a different story. Let's look and see what the free market has done:

i-9a7631a90169abe2025da9359939b947-insurance_chart200.jpg

Source: NPR Health Care Back in the National Spotlight

Note that the break in the line in the above graph was caused by an adjustment in how the numbers were tallied.

i-a704862e1629c69c4989557cd735f320-HealthCareShareGraph-thumb-300x316.jpg

And look at how the cost of both health insurance and education are skyrocketing. We will soon become a country where only the rich can afford a trip to the doctor or a decent education.

i-0633bd0624371a114c44dd1aa445a17e-InflationGraphic-thumb-300x396.jpg

The GOP and free market preachers always chant that the market is more efficient than socialized programs. But when short term profits are the goal, sometimes you need to spend a whole lot more on management in order to screw your clients. So what are the stats on overhead? This is from a NEJM article:

Background: A decade ago, the administrative costs of health care in the United States greatly exceeded those in Canada. We investigated whether the ascendancy of computerization, managed care, and the adoption of more businesslike approaches to health care have decreased administrative costs.

[...]

Results: In 1999, health administration costs totaled at least $294.3 billion in the United States, or $1,059 per capita, as compared with $307 per capita in Canada. After exclusions, administration accounted for 31.0 percent of health care expenditures in the United States and 16.7 percent of health care expenditures in Canada. Canada's national health insurance program had overhead of 1.3 percent; the overhead among Canada's private insurers was higher than that in the United States (13.2 percent vs. 11.7 percent). Providers' administrative costs were far lower in Canada.

Between 1969 and 1999, the share of the U.S. health care labor force accounted for by administrative workers grew from 18.2 percent to 27.3 percent. In Canada, it grew from 16.0 percent in 1971 to 19.1 percent in 1996. (Both nations' figures exclude insurance-industry personnel.)

Conclusions: The gap between U.S. and Canadian spending on health care administration has grown to $752 per capita. A large sum might be saved in the United States if administrative costs could be trimmed by implementing a Canadian-style health care system.

Ref:
Steffie Woolhandler
Costs of Health Care Administration in the United States and Canada
NEJM (03) 349:768-775

So who's in touch with reality? Those who believe in invisible hands, or those looking at the situation on the ground?

More like this

Alex, you are doing a great service with these posts. I have sent all three to family and colleagues. Keep it up!

By juniorprof (not verified) on 29 Aug 2008 #permalink

Bang on Alex, of course this has been covered by Michael Moore pretty extensively. Americans (or at least the majority) will not listen, unless you want to take away their guns and then whoah boy, watch the protesters come out of the wood work.

By Fellow Canuck (not verified) on 29 Aug 2008 #permalink

My sister's clinic had to start employing someone in the early 90s solely and specifically to fill out forms for insurance companies and HMOs, and to find ways to justify treatments so that HMOs would pay for them. For example, one patient she told me about needed a series of corrective leg braces as a child, but the family's HMO would not pay for this (although they would pay for the corrective surgery as an adolescent which would provide an alternative, at >16x the price). Their dedicated employee found a way to write up the leg braces as a "prophylactic nonsurgical corrective therapy" which would get approved. But needing to have such a person put an entire salary+benefits staff cost onto the clinic which was purely administrative. So much for HMOs "keeping medical costs down."

Anyway, I find these figures well within credibility.

By Luna_the_cat (not verified) on 29 Aug 2008 #permalink

Hi there,

Just wanted to say that I'm really enjoying this series that you're doing. The graphics that you've chosen along the way are very illuminating. Nice work.

All the best,

Chris

Alex, good information except for one point. Democrats are, in general, giving us no indication that they want to change things. They are taking no action that would indicate that they even know that the system is broken, because the best way to fix it is to tackle the challenging job of moving to non-profit single-payer national health insurance.

Obama is leading us to losing twice to a higher degree with more for-profit bureaucracy and more government bureaucracy. It would be a disaster, but we can change the situation.

The ONLY way we'll get Barack Obama's support is to fulfill his requirement that he communicated:
http://www.ninenineohnine.org/pages/Obama_Requirement
and realize his associated promise that he made on 4/3/2007.

Bob Haiducek (hi' duh sek)
Bob the Health and Health Care Advocate

We, too, can get peace of mind ...
http://www.ninenineohnine.org/pages/Peace_of_Mind
But we need to join thousands of others as part of communicating to each of our U.S. Representatives.

For example, we can follow the schedule ...
http://www.ninenineohnine.org/pages/Schedule
And we can get reminders to follow the schedule
http://www.ninenineohnine.org/pages/Join

Want to change things ?? ...

The way we'll get support support from the U.S. President ... and the support of the U.S. Congress ... is to join thousands of others in communicating to each of our U.S. Representatives.
We can follow the schedule ...
http://www.ninenineohnine.org/pages/Schedule
And we can get reminders to follow the schedule
http://www.ninenineohnine.org/pages/Join

Bob Haiducek (hi' duh sek)
Bob the Health and Health Care Advocate

I posted 2 comments that were posted immediately. If you want to please accept the 2nd or 3rd of my other comments, please do so.

Bob Haiducek (hi' duh sek)
Bob the Health and Health Care Advocate