December 17, 2017
Paying More for Less Care

Paying More for Less Care

by Berkeley Wellness  

You don’t need us to tell you that health-care costs are out of control. But it may surprise you to know where some of the money is going. A study in the journal Health Affairs in August found that U.S. physician practices spend nearly four times more than Canadian practices ($83,000 versus $22,000 per year, per doctor) on health insurance-related administrative work. And that’s largely because doctors and staff here have to work with multiple health plans (multi-payer system), each with its own products and procedures, rather than a single-payer system as in Canada.

Specifically, U.S. office staff spends 53 hours a week, per doctor, on insurance-related matters, compared to 16 hours in Canada, with most of the difference attributed to time spent billing and obtaining prior authorizations. If administrative costs could be brought down to Canadian levels, that would save nearly $28 billion a year, the researchers estimated. And the time saved could be better spent on patient care.

Another study recently in Health Affairs was even more sobering. Its name says it all: “A Decade of Health Care Cost Growth Has Wiped Out Real Income Gains For An Average U.S. Family.” It found that while income has risen 30 percent, on average, for a median income family over the last 10 years (which barely kept up with inflation), insurance premiums for employer-sponsored plans went up 128 percent. Meanwhile, out-of-pocket expenses (for deductibles, copays and so on) rose 78 percent.

So what have Americans gotten for their higher health-care costs? Spending more— whether on administrative matters or more costly medical services—does not seem to translate into better health overall, compared to other developed countries. In fact, Canadians, who pay far less for health care, tend to be healthier and live longer than Americans.