Healthcare Myths: Bloated Bureaucracies Cruel Necessities

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Originally posted by lj user kaath9  at Healthcare Myths #3 & 4: Bloated Bureaucracies & Cruel Necessities

This first of two related myths, as summed up by TR Reid, has it that the universal healthcare systems of other wealthy countries are run by bloated bureaucracies.

This is simply not true.

Every other system Reid cited is less wasteful than ours. This is true whether they are public or private systems. Our for-profit setup has the highest administrative costs in the world.

This is a major reason we spend more on healthcare and get less in return. Our insurance companies spend roughly 20 cents on the dollar (that is, 20% of every dollar they spend) for the non-medical, administrative costs required for a profit-making venture: paperwork, reviewing claims, rescission, marketing, etc.

In comparison, France, with its private, non-profit system, spends about 5% to cover every resident of France; Canada spends about 6%; Taiwan–which broke in its brand new system in 1995–spends only 2%.

Reid refers to Japan as the “world champion” of cost control. This, despite the fact that Japan’s population is aging. They have better health outcomes, as well, and have the longest-lived and healthiest population in the world, though they are spending half as much per capita as we are.

One of the chief reasons these systems are so efficient has to do with the very fact that they DO cover everyone–in most cases, even visitors to the country. Why? Here are a few reasons:

  1. There is a vast pool of healthy people who–through taxes or premiums–pay into the system
  2. There’s no need for a claims adjustment staff who are charged with finding reasons to not pay claims (this means doctors don’t require people in their offices to handle claims either, by the way, which brings their costs down).
  3. There’s no need to spend millions for marketing and other profit-making schemes.
  4. There’s no need for a rescission department charged with finding reasons to cut people from the rolls … just when they need the coverage the most

Actually, this ties into another myth:

Myth #4: if insurance companies covered everyone they’d go broke.

They have to be cruel to stay in business, they say. If that’s the case, then why do the systems that cover everyone continue to exist? Because everyone is covered, as I mentioned. There are young and healthy people paying in to balance the older, sicker people. Then when those people are no longer young and healthy, they’re covered, in part, by the next generation of young and healthies coming along behind. It’s sort of “paying forward” … or maybe it’s paying backward. The point is that at some point, everyone will benefit from the system, so everyone pays in.

To balance this, in the other developed countries, if a doctor okays a procedure, it’s covered. Period. The costs are known, the claim is submitted, the sick fund or government agency or insurance company cuts a check. The doctors are paid within strict time limits. Coverage can’t be canceled or refused for any reason except non-payment of premiums in systems that use that method.

These plans don’t go broke; some, such as Switzerland’s fairly new privatized universal system, are doing very well indeed. Even if the government has to put more money in or raise premiums, they’ve still got massive amounts of headroom before they’d even be in the ballpark of what we’re spending.

Hey, today was a two-fer!

TR Reid’s next myth is that these plans are too “foreign” to work in our unique country. More later.