HEALTHCARE ADMIN – An absurd Cost

Senators are stumped as to how to lower healthcare costs. They seemingly have no idea why, what, how or when it all spiraled out of control. These elected officials just can’t seem to figure it out. Why? Because they are afraid. Mice of men.

Doctors are not reaping the benefits. Nurses are most definitely not reaping the benefits. So why are the costs so exponential? Administration.

As of 2012, it was estimated that the US spends $361 billion on Healthcare administration.   When Obamacare went into effect major health insurers scrambled to create hundreds of different plans, each unique in their billing, services, and costs. Each requiring substantially more administrative duties, billing, and modeling. The cost to implement these scramble plans created a spiraling market that was soon out of control.

Once upon a time, when a person bought a plan, there were two available – major medical catastrophic, and full coverage. Today we have Platinum, Gold, silver, bronze, copper and toilet water. And within each of those categories is a whole multitude of options designed to supposedly meet a plethora of needs. There was no “max-out-of-pocket”, a deductible was $500 or $0, and billing was pretty straight forward.

If you want to lower costs, standardize – again. It worked and we broke it.

Too often, analysts attempt to align administrative costs with a single payer system, utilizing Canada’s state run healthcare as an example. The obvious problem with such a notion is the fact that Canada’s healthcare system is now in such a shambles, their government pays for Canadians to come to the US for treatment.

The move to socialized medicine has been the go-to answer for years despite the overwhelming proof that it is an abject failure.

When comparing the medical costs of the 1960’s to today, Politifact asserts that the out of pocket costs for those who had no insurance was a whopping $938 or $7000 in today’s dollars. Which would compare to the average “out-of-pocket” deductible all plans have today. The difference is – everyone pays instead of just the minority uninsured.

It also does not factor in the increased cost of premiums which now can range upwards of $20,000 annually for a family. That represents about 38% of the average family income in the US. Tack on the max-out-of-pocket and the percentage climbs to 57%.

The entire point of Obamacare was to make Socialized medicine appear to be so cost effective by comparison, everyone would clamber onboard! And the US would be one step closer to a Socialized nation as a whole just like the success we see in such countries as Venezuela.   Or Poland in the 1980’s. Or Cuba. Or France where the burden of immigrants has completely unraveled the system.

Oddly, when supporting the new and improved healthcare system, the elderly are frequently cited as their health fails and they can’t afford to visit the doctor or buy medication.   But medicare is deducted from wages, we already pay for that! So why is that even an issue? Maybe it’s the mismanagement of those funds. Or maybe it’s the – administrative costs associated with those funds?

In either case, it doesn’t relate to the topic of healthcare insurance which is a completely separate entity. It’s like saying we need to revamp the auto insurance industry because of airplanes… they both use gas.

It should also be pointed out that standardized healthcare insurance does not mean ‘standardized healthcare’. Between 1970 and 2009, healthcare administrators rose by about 3200% whereas the number of doctors remained relatively constant, rising about 100%. That equates to a rise of 32 administrators for every doctor.

All those administrators need to be paid, and The People are left to carry the load.    

Quick math: if the increase in hospital administrators is 32 per doctor, and the average salary is roughly $65000, that would equate to an increase of $2,080,000 per doctor. Given there are about 1,050,000 doctors in the US, that would equate to an awfully big number that patients and health insurance payers have to absorb.   Over $2 trillion per year.

Before Admin’s get in a tizzy, this does not mean we don’t need you, it simply means an increase of 32 per doctor is – well – Absurd.

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