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Spend $60 billion a year to avoid saving $350 billion a year

Yeah, that makes sense. See PNHP:

The reason we spend more and get less than the rest of the world is because we have a patchwork system of for-profit payers [on which the administration proposes to spend $60 billion dollars for more patches]. Private insurers necessarily waste health dollars on things that have nothing to do with care: overhead, underwriting, billing, sales and marketing departments as well as huge profits and exorbitant executive pay. Doctors and hospitals must maintain costly administrative staffs to deal with the bureaucracy. Combined, this needless administration consumes one-third (31 percent) of Americans’ health dollars.

Single-payer financing is the only way to recapture this wasted money. The potential savings on paperwork, more than $350 billion per year, are enough to provide comprehensive coverage to everyone without paying any more than we already do.

In fact, we can't afford not to go to single payer*:

The cost advantage of public health insurance appears to arise from two main sources. The first is lower administrative costs. Private insurers spend large sums fighting adverse selection, trying to identify and screen out high-cost customers. Systems such as Medicare, which covers every American sixty-five or older, or the Canadian single-payer system, which covers everyone, avoid these costs. In 2003 Medicare spent less than 2 percent of its resources on administration, while private insurance companies spent more than 13 percent.

At the same time, the fragmentation of a system that relies largely on private insurance leads both to administrative complexity because of differences in coverage among individuals and to what is, in effect, a zero-sum struggle between different players in the system, each trying to stick others with the bill. Many estimates suggest that the paperwork imposed on health care providers by the fragmentation of the US system costs several times as much as the direct costs borne by the insurers.

The second source of savings in a system of public health insurance is the ability to bargain with suppliers, especially drug companies, for lower prices. Residents of the United States notoriously pay much higher prices for prescription drugs than residents of other advanced countries, including Canada. What is less known is that both Medicaid and, to an even greater extent, the Veterans' Administration, get discounts similar to or greater than those received by the Canadian health system.

We're talking about large cost savings. Indeed, the available evidence suggests that if the United States were to replace its current complex mix of health insurance systems with standardized, universal coverage, the savings would be so large that we could cover all those currently uninsured, yet end up spending less overall.

Lives saved, better outcomes, money saved, everybody covered. What's not to like?

Well, if you're an insurance company that's in the business of collecting fees ("rents") for denying care, you might not like being cut out. Any more than the banks that who won't write you an unemployment check so they can charge you $3.00 a pop for getting your unemployment from an ATM would like being cut out. But propping up their business models is hardly my problem.

Weak ass shit. .

NOTE * Yes, I know that "oublic health insurance" is not necessarily single payer. It's also not any of the proposals on offer from the administration or the Kennedy faction of the FKD.

NOTE Now, to be fair, Krugman's encouraged by the initial leaks because the $600 billion over 10 years is in the right ballpark for a solution. Unfortunately, without policy detail -- and maybe a little leadership from The Greatest Orator EVAH -- it's impossible to tell whether the $600 billion ($60 billion a year) will be used wisely or pissed away (Exhibit A: TARP).

UPDATE McClatchy frames this story as raising taxes on the rich to pay for it. You'd think they'd want to get value for their money, then -- surely they're not all in the insurance industry -- and single payer is the best value for money.

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Submitted by jawbone on

paying or spending $350B?

Now, I'm really sleepy right now (started a new mystery writer last night, read a bit too late and couldn't get to sleep, so light back on and finished book aroudn 7:30AM. Dragging, but good today. Must sleep.) so may have missed your meaning.

Also got my Aetna blood sucking notice yesterday, kinda riled me up: As of April 1, health insurance will be $20,123/year. Damn. There oughta be a law...or at least national single payer healthcare/insurance.

Submitted by jawbone on

Yes, logic would indicate that if $350B could be saved by spending $60B, the rational actor with access to $60B would do that. The rational actor would also have by now temporarily nationalized the banksters (or, as Bernanke would put it, go into a temporary public-private partnership).

Guess we're not dealing with rational actors.

So, how do we adjust our actions given we're dealing with irrational actors?

Ah, yes, figure out what is actually motivating their actions, supposing they are l rational.

Caro's picture
Submitted by Caro on

... is make Medicare available to all. Everyone will gravitate toward it, because it's so much cheaper. Then it will start to seem silly to pay for it separately, rather than just include it in taxes.

Oh, and along with making it available, they should switch Congress and all federal employees to the same plan available to the rest of us.

Then sit back and watch the improvements happen.

zuzu's picture
Submitted by zuzu on

Listen to the opponents of offering Medicare as an option. They all talk about people opting out of the private system as a result.

As if that's a bad thing.

Submitted by jawbone on

empoyee subsidy. Or offer access to both plans and see where people sort out.

But, based on the solicitous care shown for the Big Bankster Boiz, I fear Obama either wants to give the same TLC to Big Insurance or he doens't get it and is being influenced by his Big Bidness/Bankster Boiz advisers.

Salmo's picture
Submitted by Salmo on

I have a number of siblings who are doctors, and as primary care providers they are sent guidance from insurance companies about what their costs can be. Extrapolating from those guidance documents, and knowing their own costs for complying with insurance requirements, they uniformly estimate overall costs associated with insurance control of health care to be at least 40% and most likely over 50% of overall costs.