Reducing Administrative Costs

By Samuel Metz, M.D.
New England Journal of Medicine, Correspondence, Feb. 14, 2013

In their Perspective article, Cutler et al. (Nov. 15 issue)[1] describe methods for reducing administrative costs in our health care system. The authors acknowledge that single-payer systems eliminate many administrative expenses, but they omit those estimated savings and dismiss the adoption of a national single-payer system as “unlikely.”

Estimates of administrative costs that could be recovered by a national single-payer system have been reported as $204 billion,[2] $230 billion,[3] $350 billion,[4] and ranging from $400 billion to $500 billion.[5] These numbers can be compared with the authors’ estimates of $23 billion in recoverable costs without a single-payer system.

American single-payer health care is not impossible — it is a reality. More than 120 million Americans currently receive care through single-payer plans, both private (multiemployer plans and self-funded plans) and public (e.g., Veterans Affairs, TRICARE, and Indian Health Service). That’s 39% of our population. All these single-payer plans provide better care to their populations for less money than private health insurance.

We physicians should not underestimate the cost-effectiveness of a single-payer system. We should not dismiss our ability to convince the authors and our national leaders that single payer is not “unlikely”; it is inevitable. We are already 39% of the way there.

References
1. Cutler D, Wikler E, Basch P. Reducing administrative costs and improving the health care system. N Engl J Med 2012;367:1875-1878
2. Institute for Health and Socio-Economic Policy. Single payer/Medicare for all: an economic stimulus plan for the nation. 2009 (http://nurses.3cdn.net/c6fb9a313be501086e_1vm6y1duy.pdf).
3. Kahn JG, Kronick R, Kreger M, Gans DN. The cost of health insurance administration in California: estimates for insurers, physicians, and hospitals. Health Aff (Millwood) 2005;24:1629-1639
4. Rodberg L, McCanne D. Upgrading to national health insurance (Medicare 2.0): the case for eliminating private health insurance. Chicago: Physicians for a National Health Program, July 13, 2007 (https://pnhp.org/news/2007/july/_health_insurance_fo.php).
5. Kuttner R. Market-based failure — a second opinion on U.S. health care costs. N Engl J Med 2008;358:549-551

Samuel Metz, M.D., resides in Portland, Ore. He can be reached at s@samuelmetz.com.

N Engl J Med 2013; 368:683February 14, 2013DOI: 10.1056/NEJMc1215485

http://www.nejm.org/doi/full/10.1056/NEJMc1215485?query=TOC