Monday, June 10, 2013

Problems with private insurance

Private insurance in particular has very high administrative costs.  U.S. insurance companies often spend 25% to 30% of total revenue on expenses other than patient care (sales, administration, and profit).  In addition, doctors and hospitals also have substantially higher administrative costs in the United States than they do in other countries.  Studies report that advanced American hospitals have two full-time administrative employees for each occupied bed, about ten times as many as do comparable German hospitals.  
That's from Roberts and Hsiao.  It's a decade old, but such statistics make me skeptical that any set of health reforms would be sufficient to make the private health insurance market function better than the hybrid fee-for-service/single-payer Singapore-style system or even a single-payer Canada-style system.

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