With Sen. Prez Murray's health care cost agenda coming up on the near horizon, John McDonough directs our attention to Shannon Brownlee's widely praised book “Overtreated: Why Too Much Medicine Is Making Us Sicker and Poorer.” I haven't read it yet, but I will. The thesis is that one-third of our health care spending is pure waste — it doesn't make us healthier, and indeed does the opposite.
In the comments, Beth Israel Deaconess CEO Paul Levy gamely asks:
Of course, this raises the question: “Which one-third?” If I am a typical consumer, if it is the test or treatment that I demand and expect for myself, my spouse, my child, or my parent, then I won’t consider it a waste! There, I suggest, is a lot of the underlying problem.
Now, Levy is well-known for being a real leader in greater hospital transparency, so I don't want to pick on one of the good guys. But Mr. Levy, with all due and deserved respect … Isn't it your job (i.e. your doctors' jobs) to know which one-third is waste? And if Brownlee's thesis is correct — that the overtreatment actually hurts health — then isn't knowing a fundamental matter of “Do no harm”?
Patients don't have the expertise to know what's necessary and what's not. But I do know that I don't want to take more drugs with side effects than are necessary; I don't want more procedures than are necessary; I don't want my life to be disrupted more than necessary. Maybe it is consumer-driven. But it should be up to doctors to put the brakes on that, as a matter of good health.
UPDATE (by David): Paul Levy responds in the comments:
Geez Charley,
if you are going to quote me, at least include the last two sentences. If you had, people who don't take the time to click on the link could see that I am suggesting that the problem derives from BOTH the consumer side and the provider side. Here is the whole quote:“Of course, this raises the question: 'Which one-third?' If I am a typical consumer, if it is the test or treatment that I demand and expect for myself, my spouse, my child, or my parent, then I won't consider it a waste! There, I suggest, is a lot of the underlying problem. There are things we as consumers expect and demand here in the US that are not part of the usual course of health care in other countries.
“Of course, there is also supply-driven overuse that deserves lots of attention.”
What hurts in health care is overuse, underuse, misuse, and waste. Our society has all of these in abundance. If we actually started publishing real clinical results from all providers, maybe we could start to get a handle on that. If we had a stronger primary care system, i.e, with decent insurance payments to primary care doctors, maybe they could spend more than 18 minutes with each patient and become more than triage waystations on the path to overuse of higher level specialty care.
During my annual trip to the doctor, he usually asks probing questions to see what might ail me, or what presciptions or treatments (like flu shot) I may want. Since I feel fine, I decline all offers. He surprised me when he responded that I was unusual in this regard, that most patients request more than he would recommend. I didn’t follow that by asking him would he prescribe the requested tests or prescriptions to avoid the risk of undertreating a patient. But I suspect that would be true.
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p>Maybe the best way to mitigate this form of waste is to eliminate the yearly healthcare deductible (to encourage that annual visit) but increase the co-pays for all but the most needed services, thereby discouraging frivalous use of the healthcare services.
Here’s a comment/reply I posted at the blog in question… I think we need to get our definitions un-twisted before actually legislating.
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Here’s an idea. In addition to Universal Single payer, let’s have Universal Gasoline where everyone pays additional income tax to subsidize gas prices.
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p>All US citizens would be eligible to use unlimited gas for travel at 25 cents per gallon. Sure, there’d be wasteful trips. Even so, the government shouldn’t be allowed to raise the price. After all, think of the poor drivers out there who can’t afford reasonably priced transportation!
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p>The idea of Universal Gasoline is not so different from the health care market–even in the absence of single payer. In today’s healthcare market, 85% of the consumption is paid by 3rd parties (employers, medicare, medicaid).
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p>The consumer simply has no incentive to save if immediate cost to the consumer of the product is cheap. That’s got to be one incredible source of the waste: unnecessary visits to ER and doctor.
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p>Aside. As part of EMT training, we were required to spend 16 hours in an ER. I was in two large metro hospitals, and in the course of 16 hours saw precisly 2 cases that were emergencies, and dozens that were triaged as non-emergencies, yet the non-urgent patient was still given a bed and physician and nurse attention until the symptoms were addressed: colds, flu, anxiety attacks, minor injuries, ear wax build up (seriously).
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p>They weren’t there because they were uninsured because it was a mixed bag. They were there because they were ill and could see a competent physician quickly for $25. Waste?
Damn tootin’! And a primo, A-1 example of why we need universal health care, to keep people out of the ER ($$$$$$$) for ridiculous reasons, and get them seeing a regular doc or nurse practitioner to deal with the little stuff.
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p>gary, I’ve got a friend who’s a resident at a local urban hospital — the stories, the stories, the silliness … How about going to the ER for a pregnancy test? Can you top that?
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p>I know Universal health and single payer are the answer to everything from global warming to fighting Al Queda, but how would it prevent visits to the ER?
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p>Midnight, stuffy nose. 100% of us are entitled and the ER is open. Come on down.
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p>Seems that Universal Coverage would encourage more use of ER, not less.
… facility maintenance can build up and result in expensive capital project fixes as well as maintenance emergencies, regular visits to doctors can prevent or mitigate problems before they become more serious and possible ER visits.
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p>The other thing to remember about our private insurance system is that there is a perverse incentive for insurers to delay treatment. If a $200 treatment x to manage disease y helps prevent a $20,000 complication z from the same disease, the calculation is to check on the age of the patient and see if the insurer can run out the clock until Medicare kicks in and its not their problem anymore.
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p>I just don’t believe your Machovelian assertion. First, it implies a complicity by the physician which is very much opposite from their nature and Oath; and second I’ve just seen too many situations where insurance companies PAY now rather than risk paying later.
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p>Frankly, I think there’s arguably a criminal case where an insurance company or doctor “[checked] on the age of the patient…” and ran out the clock to Medicare coverage.
The doctor doesn’t ‘check’ anything. If I were to be on the same private insurance for my whole life and the insurance company couldn’t kick me off it, they would have an incentive to make sure that I see the doctor and take adequate steps to manage my diabetes to minimize future complications (which can get expensive). A company with such incentives will make sure that treatments and medications that help stave off future expenses will be as affordable as they can make possible. If Medicare takes over for them they have incentives, but they are not financial. So if you run such a company and you want to manage costs to maximize profits, its clear what mechanisms are in play and you game the system to the extent you can get away with.
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p>If you go in for a blood test, blood sugar is a standard test.
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p>If blood sugar is greater than 100, or greater than 130 for diabetics, you’re saying the doctor would look the other way if the person is, say, 64?
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p>If that’s what you’re saing, CHANGE DOCTORS!
that the doctor doesn’t perform any check against ‘the clock’ in order to figure out the financial incentives of treatment… the insurers do.
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p>The doctor would likely recommend treatment. Then you’d get the pricing information and the bills or you’d be denied, depending on how the insurance company manages their risk. Knowing that they don’t have to handle you when you are older and complications become likely is part of managing that risk.
I know too many Type II diabetics who are in their 50s and 60s receiving continuous treatment and I know of no one who is proceeding through life untreated because they’re nearing Medicare age.
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p>Anecdotal I know, but again, a bold claim require bold proof. You’re describing a conspiracy by private insurers against people nearing Medicare age! I’m heading for the tin foil hat.
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p>If you go in for a blood test, blood sugar is a standard test.
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p>If blood sugar is greater than 100, or greater than 130 for diabetics, you’re saying the doctor would look the other way if the person is, say, 64?
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p>If that’s what you’re saing, CHANGE DOCTORS!
An old quote from a Mayo Clinic doctor about the incentives.
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p>The article is about a proposed solution, but he contrasts it against the current situation, including the incentive issue in the quote:
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Bold claims deserve bold proof. Read the words:
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p>”private insurers have incentives to delay treatment…” isn’t the same as “private insurers delay treatment”.
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p>Heck, I have an incentive to take multiple newpapers from my nearby newspaper box (it’s open for a quarter and there’s a bunch there to take for free). But I don’t.
… not so bold to presume that a for profit company manages its money incentives so as to minimize costs. It’s not illegal to manipulate premiums or pricing in their services profile. Given that, why would they handicap themselves knowing their competition is playing by the same rules?
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p>There’s an incentive to do it.
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p>Look, Exxon could make more money by adding water to stretch gasoline, but I’m guessing that doesn’t happen too often because first, it’d be illegal and second, if found out, they risk enormous market, civil and criminal reprucussions.
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p>Same with insurance companies, maybe there’s an incentive to ‘run out the clock’ and deny coverage until Medicare takes over, but if that’s actually happening as a result of some overt or covert plan, someone will end up sued, fired or in jail.
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p>There’s an incentive not to do it.
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p>We want to prevent uneccessary trips to the ER.
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p>If access to your doctor/provider is as easy as access to the ER, then people will go to their Doctors/provider… especially if the ER is crammed full of every Tom, Dick and Harriet who’ve been run over by a Mack, had the Russian vodka made at Chernobyl and/or were part of a lawnmower-run-amok scenario… you know, the reasons the ER exists in the first place…
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p>My doctor isn’t always available, but the practice of which he is a part makes a nurse-practitioner available for the instances that are immediate but not ER-urgent.
Folks love to comment about medicine, without actually being employed in the arena, because everyone is ultimately a healthcare consumer and thus an expert.
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p>I have been employed in healthcare for fifteen years now in multiple capacities. I see my PCP twice a year because he is covering his backside. I wouldn’t see a doctor, any doctor, unless there was something very wrong or unless my arm is being twisted for several reasons.
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p>The most important reason that I have is that MD’s et al are terrified of being sued for failure to diagnose/treat. Therefore the most mundane and inconsequential of issues are jumped on and a test ordered or a med prescribed when two weeks of ignoring the issue will result in its own resolution.
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p>People go to the doctor with bad colds and demand an antibiotic. The common cold is viral and an antibiotic has zero efficacy but the doctor wants to keep the Pt. happy so they prescribe. Cost? MD visit and med is probaly around $200-250. Times how many people?
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p>I observed over the course of the years that there are considerable people who make a stunning amount of trips to
the MD or hospital for a myriad of perceived ailments. None of consequence and none requring diagnosis and treatment. Hundreds and thousands of dollars wasted.
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p>Psychiatry and mental health is a tremendous drain in healthcare and its efficacy is iffy at best except for folks who are seriously mentally ill and must be hospitalized for their own or others safety.
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p>As I have said before, smokers alcohol and drug abusers, diabetics who are noncompliant are collectively siphoning off billions of healthcare dollars..
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p>We spend next to nothing on children and billions on people who have little time remaining. What’s the rationale in that? Is that compassion? Our priorities in spending our healthcare dollars are ass backwards.
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p>Our poltical system, which ultimately determines where healthcare dollars will be spent, is manipulated by people who vote. Children do not vote, ergo they get the short end of the stick.
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p>Medicare/medicaid is on the verge of collapse. Some folks want universal coverage so called. They enact that and it will be the kiss of death.
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p>As I have asked so many times before, who will provide the services? Me? Nope, just like many folks I work with, I’m gett’n out of the business. Lousy hours, weekends, low pay, and liability.
Was this before or after your extended service in the US Marine Corps, and your construction job on the Big Dig, in which you saw an electrician being paid hundreds of thousands of dollars to change light bulbs?
http://www.tetrahedron.org/abo…
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p>http://www.patientprivacyright…
if you are going to quote me, at least include the last two sentences. If you had, people who don’t take the time to click on the link could see that I am suggesting that the problem derives from BOTH the consumer side and the provider side. Here is the whole quote:
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p>”Of course, this raises the question: ‘Which one-third?’ If I am a typical consumer, if it is the test or treatment that I demand and expect for myself, my spouse, my child, or my parent, then I won’t consider it a waste! There, I suggest, is a lot of the underlying problem. There are things we as consumers expect and demand here in the US that are not part of the usual course of health care in other countries.
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p>”Of course, there is also supply-driven overuse that deserves lots of attention.”
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p>What hurts in health care is overuse, underuse, misuse, and waste. Our society has all of these in abundance. If we actually started publishing real clinical results from all providers, maybe we could start to get a handle on that. If we had a stronger primary care system, i.e, with decent insurance payments to primary care doctors, maybe they could spend more than 18 minutes with each patient and become more than triage waystations on the path to overuse of higher level specialty care.
All the liberals laugh at the laffer curve: cut tax rates to raise taxes.
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p>But you’re saying raise primary care rates to cut medical spending. Interesting idea.
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p>Would say, 45 minutes rather than 18 result in better triage? Hard to imagine. Seems it would result in better chit-chat and bedside manner, but at the end, a tough call in a primary care office is just as tough at the end of 18 minutes as 45. Look at the Hospitalists. They make tough triage call regularly in hospital rooms visits that last far less than 18 minutes.
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p>PC doc makes what to start, $130K? $150K? You suggesting that paying them more makes them better docs and better at triage? Or, maybe paying them more attracts better docs? The latter seems unlikely because of the tight supply, but you know better than me. Or, maybe you have another idea that I’m not getting.
Yes, I should have included the last two sentences. I wasn’t trying to set you up to look bad — honest!
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p>While I may have snipped some valuable context — for which I’m sorry — I don’t think my omission changed the general thrust of the comment, which was mostly directed at consumer-driven waste. We agree that’s a huge part of it, but it strikes me that physicians and other medical professionals could do a better job of being gatekeepers against waste medicine. But indeed, the industry seems shot through with compromises to that role, with docs doubling as drug reps, etc.
The corporate model healthcare Emperor has no clothes yet we continue to act like sheep looking to these emperors to take care of us and “fix” the problems that they largely created. Incredible.
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p>The absurd amount of fragmentation, complexity, bureaucracy and waste in the overall healthcare system is a major obstacle to doing anything meaningful about the overtreatment issue.
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p>I’ve worked in healthcare for 30 years in almost all settings, including major teaching hospitals, community clinics, and home care nursing. The system isn’t really a functioning system at all; it’s a mess. Ask any provider, a seriously ill patient or their family member and they’ll tell you the same thing. And it’s impossible to fix something within a system that is caused by the very nature of the system itself. You get to the root causes and change the system.
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p>Here’s a major cause of the system dysfunction: The insurance industry’s fragmentation, complexity and bureaucracy. This exists because it helps the insurance companies compete in the commercial marketplace selling their various “products” and maximizing their profits, which they must call “surplus” if they enjoy nonprofit legal status, like MA Blue Cross Blue Shield Harvard Pilgrim/UnitedHealth HMO, and most other MA insurers do.
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p>Relying almost entirely on private insurance, with their ~500 different plans nationwide, makes it much harder if not impossible to design and implement effective Quality Assurance programs that would also discourage and monitor for fraud and overtreatment by physicians.
hospitals as well as the insurance industry. We’ve discussed the 12% administrative costs of for private insurers and Medicare at around 2%, but once you also factor in the added complexity you miss all the additional administration overhead at hospitals. The PNHP has estimated that the total cost of administrative waste is 31% of health care spending.
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p>The study actually compares the US and Canada’s systems on administrative costs. The fact that we waste almost a 1/3 of our health care spending on administrative costs is mind boggling. I work with health care organizations in both the US and Canada, each Province handles it’s reimbursement and reporting requirements and each have unique interfaces. One format across the entire country probably makes more sense, but the biggest thing is the simplicity of the requirements. In the US, CMS routinely put out new requirements where you need a few FTEs just to keep up with all the new regulations, and that’s mostly for Medicare.
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p>It’s all these insurers with different requirements that drive up the administrative costs. This doesn’t have to be difficult, it really could be a lot easier with not a lot of effort but the way it’s set up now it’s not going to happen. They tried to push uniformity along with the HIPAA privacy regulations where the added “administrative simplification”, one format that everyone had to follow. Well, one Institutional, one Professional, one Dental and one Drug format. That really didn’t turn out that way, what happened instead is a single adopted specification that each insurer shoe horned their own requirements that put us back to the mess we started with.
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p>Even if we’re stuck with private insurers, why not have everyone adopt a single requirement for reporting and reimbursement. One that doesn’t need to add wholesale changes every few months. I imagine they will still negotiate their own contracts, which still adds to the administrative costs. But at least that’s a start. There will be a whole lot of unhappy consulting firms, but I can live with that.
You’re probably aware that the presumption that administrative costs are lower in a National Health Program or even in Medicaid, is rebuttable. I won’t bother, because at the end of the thread, no one will be convinced either way.
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p>But, a question, would you really be happy with a National Program that wouldn’t provide a proven treatment to someone because it’s too expensive, EVEN IF the person wished to buy it with her own money.
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p>If your answer is yes, then we’ll just have to agree to disagree.
that people should not have a proven treatment withheld for any reason whatsoever. But what I’m trying to point out that our money for health care should go to, you know, actual health care.
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p>Can we reduce the pushing of papers, crazy coding requirements, the jumping through hoops hospitals need to do in order to get paid. Then we’d have something. 31% is a crazy number to pay for non-health care related expenses. I hope you agree with that.
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p>The Medicare administrative numbers are solid. The only thing I’ve heard to argue is from Charlie Baker who said that expenses are higher for Medicare so the percentages seem lower than they actually are. I posted that there is much more activity on 62+ patients than 25 year olds so there must be some kind of offset here. What is it, I asked that HPHC release some numbers on admin cost per visit, then maybe a comparison can be made with Medicare, all I got was crickets. He’s full of crap.
The 31% overhead rate is the highest admin cost an advocate can claim.
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p>Then the next step of the advocates’ argument is to boast how low by comparison Medicare admin costs are.
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p>Dr. Woolhandler (who advances the 31%) is a single payer advocate and has a bias. Cato et. al. is not an advocate and also has a bias.
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p>If you look at the Cato Institute’s assessment of Dr. Woolhandler’s claim, the rebuttal is this: her estimate is misleading.
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p>Misleading because, Government regulators shift more administrative costs to physicians than private insurers shift, just like IRS shifts compliance and admin costs to taxpayers.
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p>The Woolhandler method counts the cost of private insurance premium collection (advertising, commissions) but yet ignores tax collection costs to pay for public insurance.
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p>Actuaries Milliman & Robertson in a similar study, found that Medicare spent 26.9% in overhead compared to 16.2 by private.
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p>So, is Woolhandler right and Milliman & Robertson wrong?
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p>Certainly, I can’t tell based on the info I have. Not sure how you can either but I’m all ears.
This bit of history might be of interest to some of you as it relates to admin spending as a piece of taming the beast of health care costs.
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p>As a result of the statewide ballot question #5 in 2000, a volunteer-led effort that sought to enact a broad health reform law to cap health insurer admin spending at 10% and to make the state accountable for implementing a universal health care program by July 2002(!), the state lege commissioned an independent analysis of state health care spending. The LECG consulting group, a subsidiary of William & Mercer, won the RFP bid for the project.
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p>The lege had committed to doing the spending analysis study as part of a backroom deal to derail Question 5 that was cut with HCFA and AFL-CIO in exchange for them abandoning support for ballot question 5. The volunteer activists’ “Yes on 5” campaign was badly crippled by the deal and went down 48%-52%. That final vote tally was also affected by being outspent 100 to 1 by the “No on 5” campaign(bankrolled with $5.4Mil by the insurance co’s with MA BC/BS leading the spending).
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p>The LECG analysis of health care spending in Massachusetts issued their final report in late Dec 2002. It included lots of facts and figures that I copied and pasted below, including the figure for overall administrative spending of 39%. Yes, 39%.
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p>LECG REPORT TO THE MASSACHUSETTS LEGISLATURE, excerpts:
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p>”…Total administrative costs Administrative components Administrative Premium $1.00
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p>$0.27 – 0.62 of every premium dollar goes toward administrative expenses [avg $.39 with the following breakdown]:
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p>Insurer administrative costs: $.05 -.20
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p>Hospital administrative costs: $.08 -.16
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p>Physician administrative costs: $.05 -.08
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p>Other* administrative costs: $.09 -.18
…and available here