The Crux of the Problem

In his post at The Hill after noting that properly reckoned Medicare administrative costs aren’t that cheap, Charlie Katabi gets to the crux of the problem:

If Congress can’t muster the votes to slow the spending of a single health program, why would single-payer advocates assume they could enact a whopping 40 percent pay cut across America’s entire health care system? If Sanders’ plan was ever enacted into law, interest groups would ensure they continue to receive high compensation from the new single-payer plan, which will increase costs even further.

That’s basically what I’ve been complaining about for the last two decades. I realize how appealing grand solutions are but you don’t solve a difficult problem by making it intractable which is what M4A would do.

Rather than searching for grand solutions why not approach reducing health care costs like the old wisecrack about eating an elephant. Take it one bite at a time. Let Congress take one government program and reduce its costs. Choose a small one. My guess is that they don’t have the stomach for it.

4 comments… add one
  • steve Link

    This guy is not well versed in health care economics, or math. Surprised you would cite this. First, yes it is true that if went to M4A taxes would rise a lot. However, people would not be paying (or their company) for health insurance, so the total would be less, using the numbers from the libertarian economist.

    Next, he says Medicare admin costs are calculated as a total percentage of Medicare spending, and that spending is so much higher that if we then spent the same amount on private patients it would cost more. But, why would we? The reason admin costs are lower per person for private insurance is that they don’t do much. If Medicare patients rarely got sick and Medicare rarely had to make payments, their admin costs would decrease also. Additionally, too lazy to check what this guy I never heard of used for his sources, but these guys almost always use insurance industry sources of admin costs, and they usually leave out marketing costs and profits in their calculations.

    And again, the private people always, always leave out administrative costs on the provider side. I am 99% sure I have linked this before, but will do it again and quote the pertinent part.

    “Because providers in the US have to deal with so many different insurance companies and systems, they waste a lot of time and manpower. How much? Well, they found that practices in the US spent about $83,000 per physician per year interacting with insurance companies, while doctors in Canada spent about $22,000. This isn’t about outcomes or medicines or care. This is just how much money had to be spent per doctor to deal with payers.”


  • walt moffett Link

    and of course, that whole legion of clerks, accountants, economists, physicians, lobbyists and lawyers will simply fade away into more rewarding work, such as coastal time share condo sales with single payer. A lot of rice bowls are filled by the current system and vigorous defences will be made.

    BTW, anyone notice in almost all single payer nations, there are still thriving private practices and health insurance.

  • steve Link

    “BTW, anyone notice in almost all single payer nations, there are still thriving private practices and health insurance.”

    Very few countries have a single payer AND a single provider system. Most have a hybrid of some sort. (Single payer just means that a single source pays for everything. It can pay private insurance companies, individuals, government entities or some combination.) So, this has been noticed for decades and most systems were actually planned that way.


  • Andy Link

    I looked up the numbers for Tricare. Tricare breaks out its spending between the private and public providers. For the private portion, administrative costs are about 7% plus another percent for contractor fees. This figure doesn’t include administrative costs borne by the providers themselves nor does it completely cover actual administrative government spending since Tricare piggybacks on DEERS, the DoD system that tracks all personnel and their eligibility for various benefits.

    I think Tricare probably presents a more realistic figure of what administration would actually cost for a single-payer system. To be on the conservative side, I’d round it up to 10% -still less than private insurance, but more than the low-ball estimates for Medicare.

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