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To: Rick Faurot who wrote (35277)	1/16/2004 9:52:51 AM
From: laura_bush	Respond to of 89467

Study Shows National Health Insurance Could Save $286 Billion on Health Care Paperwork: Public Citizen * Physicians for a National Health Program Jan. 14, 2004 Authors Say Medicare Drug Bill Will Increase Bureaucratic Costs, Reward Insurers and the AARP A study by researchers at Harvard Medical School and Public Citizen to be published in Friday’s International Journal of Health Services finds that health care bureaucracy last year cost the United States $399.4 billion. The study estimates that national health insurance (NHI) could save at least $286 billion annually on paperwork, enough to cover all of the uninsured and to provide full prescription drug coverage for everyone in the United States. The study was based on the most comprehensive analysis to date of health administration spending, including data on the administrative costs of health insurers, employers’ health benefit programs, hospitals, nursing homes, home care agencies, physicians and other practitioners in the United States and Canada. The authors found that bureaucracy accounts for at least 31 percent of total U.S. health spending compared to 16.7 percent in Canada. They also found that administration has grown far faster in the United States than in Canada. The potential administrative savings of $286 billion annually under national health insurance could: 1. 2.Offset the cost of covering the uninsured (estimated at $80 billion) 3.Cover all out-of-pocket prescription drugs costs for seniors as well as those under 65 (estimated at $53 billion in 2003) 4.Fund retraining and job placement programs for insurance workers and others who would lose their jobs under NHI (estimated at $20 billion) 5.Make substantial improvements in coverage and quality of care for U.S. consumers who already have insurance Looked at another way, the potential administrative savings are equivalent to $6,940 for each of the 41.2 million people uninsured in 2001 (the most recent figure available for the uninsured at the time study was carried out), more than enough to pay for health coverage. The study found wide variation among states in the potential administrative savings available per uninsured resident. Texas, with 4.96 million uninsured (nearly one in four Texans), could save a total of $19.5 billion a year on administration under NHI, which would make available $3,925 per uninsured resident per year. Massachusetts, which has very high per capita health administrative spending and a relatively low rate of uninsurance, could save a total of $8.6 billion a year, which would make available$16,453 per uninsured person. California, with 6.7 million uninsured, could save a total of $33.7 billion a year, which would make available $5,016 per uninsured person. (See accompanying chart for details on other states.) Last week, the government reported that health spending accounts for a record 15 percent of the nation’s economy and that health care spending shot up by 9.3 percent in 2002. Insurance overhead (one component of administrative costs) rose by a whopping 16.8 percent in 2002, after a 12.5 percent increase in 2001, making it the fastest growing component of health expenditure over the past three years. Hence the figures in the Harvard/Public Citizen Report (which was completed before release of these latest government figures), may understate true administrative costs. The authors of the International Journal of Health Services study attributed the high U.S. administrative costs to three factors. First, private insurers have high overhead in both nations but play a much bigger role in the United States. Second, The United States’ fragmented payment system drives up administrative costs for doctors and hospitals, who must deal with hundreds of different insurance plans (for example, at least 755 in Seattle alone), each with different coverage and payment rules, referral networks, etc. In Canada, doctors bill a single insurance plan, using a single simple form, and hospitals receive a lump sum budget, much as a fire department is paid in the United States. Finally, the increasing business orientation of U.S. hospitals and insurers has expanded bureaucracy. The Medicare drug bill that Congress passed last month will only increase bureaucratic spending because it will funnel large amounts of public money through private insurance plans with high overhead. "The recent Medicare bill means a huge increase in administrative waste and a big payoff for the AARP," said study author Dr. David Himmelstein, an associate professor of medicine at Harvard and former staff physician at Public Citizen’s Health Research Group. "At present, Medicare’s overhead is less than 4 percent. But all of the new Medicare money – $400 billion – will flow through private insurance plans whose overhead averages 12 percent. So insurance companies will gain $36 billion from this bill. And the AARP stands to make billions from the 4 percent cut it receives from the policies sold to its members." Full article: citizen.org