How our health care system could be more efficient – part two

IMO.. our system has too many for-profit middlemen.. what we don’t know is how many middlemen are there in the system supporting the middlemen… recently a company that negotiates the rebates (kick-backs) from the Pharma for the PBM’s came to light. It was also recently reported that certain Pharma’s have paid the PBM’s >50% rebate (kickback) on certain popular brand name drugs.

Throw in the estimated overhead of insurance industry of 20%-30%.. and it is easy to see up to 50% of our healthcare dollars being consumed by administrative costs. Do we spend the most per capita of any industrialized because we have evolved such a infrastructure – trying to save money on healthcare – that .. that infrastructure is now pushing total costs higher and higher.

Are we comparing our for-profit driven healthcare system with those of other countries that are structured differently from a for-profit perspective?

One has to ask.. how many dollars are spent on this infrastructure that does nothing more than document monies a patient spends towards their deductible when they will never spend enough to satisfy that deductible and be able to have any claims where benefits of their policies are actually paid?

When you look at the overall health insurance system… the insurance companies are really not in the business of  insurance.. they are mostly in the claims processing business for big businesses that are self-insured under ERISA.

It was recently reported that for every person employed.. there is one person who is covered by Medicare/Medicaid or combination of the two, approximately 100,000,000. According to this report.. there are 134 million people covered under a ERISA plan..

If one considers the 100 million on Medicare/Medicaid, 134 million and 50 million uninsured… that is 284 million. With the US population at 313 million.. this leaves  29 million people that MAYBE be insured either through small groups or individually…  So the health insurance business MAY BE actually insuring < 10% of our population.

I recently saw a premium quote from a part B supplement policy where they wanted $240 additional annual premium to pay the $140 medicare part B deductible.. This would suggest that the insurance company’s has a 40%+ administrative overhead.

What if we went to a standardized coverage – like Medicare – and pts (except those on Medicaid) would be responsible for some deductible ($500 -$1000 per person) out of pocket that would be submitted to the carrier… but not adjudicated until they had met their deductible.

Once the deductible is met.. they would be covered by Medicare for the balance of the year. This could all be funded by a few percent federal sales tax. Before you start shouting “regressive taxes”… most states have a sales tax at or above their income taxes… no one seems to see that as regressive.. and besides.. the more you make the more you spend.. the more you spend.. the more taxes you pay…

Lets turn our health care dollars back to providing healthcare to the people in our society… rather than waste them on an administrative infrastructure… wasting those dollars in trying to figure out how to not to spend those dollars.

One Response

  1. Administrative costs are drowning the United States healthcare system. Just look at all the paperwork involved just to comply with the HIPAA regulations if you don’t believe me. Medical malpractice, fraud, and drug diversion all contribute to the cost problem we now face. Healthcare costs are a big problem. And we seem to be failing at finding ways to contain those costs. Nobody wants to hear about some of the real solultions that might help lower costs. There is too much money involved and too many people make quite a bit of money with the system the way it is now.

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