The United States health care system is by far the world's most expensive – not just in total but per person served. Bureaucratic costs are the single largest reason, and a new study reveals the scale. In 2017, Americans spent an estimated $812 billion on paperwork associated with medical care, either through direct payments or taxes, on top of the actual costs of being treated. Even worse, its proportion is growing.
The figure comes from a study published in the highly influential Annals of Internal Medicine. On average, each American spends $2,479, so that bits of paper concerning their health coverage can be shuffled around, a figure separate from corporate profits made in the process. Canadians, who the study used as a sort of control, spend less than a quarter of that.
The largest American component, $933, is in hospital administration costs. That's an average, including millions of people who didn't set foot in a hospital all year. Naturally, no hospital runs for free, but north of the border, the cost is just $196 per Canadian. It's a lot cheaper dealing with one (government) insurer than with dozens of competing private firms desperate to pay as seldom as possible, let alone extract payments from the uninsured.
Meanwhile, the overheads of the insurers themselves cost Americans $844 per person. For Canadians, that's $146.
"Medicare for All could save more than $600 billion each year on bureaucracy, and repurpose that money to cover America's 30 million uninsured and eliminate copayments and deductibles for everyone," the paper's senior author Professor Steffie Woolhandler, from the City University of New York, said in a statement.
Woolhandler was also an author on a paper attempting to estimate comprehensively the bureaucratic share of America's health costs, which used data from 1999. That study found that paperwork accounted for 31 percent of health care spending in the US; this has grown to 34.2 percent, mostly because private insurers are now enrolling many Medicaid and Medicare recipients, adding costs in the process.
If you're having trouble imaging what $600 billion a year could do if used productively, heres are a few ideas.
- It's estimated the nation's infrastructure needs a third as much (above current allocations) to meet demand.
- One (admittedly highly disputed) claim is it would take six months' worth to stop global warming.
- Student loan debt could be paid off in 28 months.
- One-fifth of this figure would end world hunger.