Straight from the “I almost forgot to blog this really important study” files comes this zinger (and an SF Chronicle summary): billing and insurance-related (BIR) functions represent 20–22 percent of privately insured spending in California acute care settings. That means 20 cents of each dollar spent on health care by insurers, doctors’ offices, or hospitals goes toward expenses so that people or organizations can be billed. None of us can really comprehend the number that this actually represents–$26 BILLION, but it’s obviously substantial.
Many advocates of health care reform note that an incredible amount of money is spent on administration, and much of this money is wasted. What is significant about this study, then, is that it specifically attempts to divy up the money spent on administration into “possibly-useful administrative spending,” and “possibly useless spending” (billing and insurance-related functions). From The Chronicle:
Researchers used data collected from 73 insurers between 1996 and 2001, survey responses from physicians and hospital administrative costs reported to the state. They then estimated how much of each health care dollar went to administer health insurance in California.
The study concluded that 21 percent was spent on insurance administration and an additional 13 percent was used to cover other administrative tasks, such as maintaining medical records. “What you’re left with is that 66 cents (out of every dollar) is spent on health care,” Kahn [study author] said.
Overall, private insurers’ spent the least on BIR, hospitals were 2nd, and private physicians’ came in last (this makes sense; the smaller the organization, the harder it is to streamline everything).
Look, even if you’re a libertarian strictly against government regulation, can’t you agree that that $26 BILLION could be better spent on patient care?