We want to cut health care spending by about 45% while treating 80 million more people

[Recursion]

http://data.worldbank.org/indicator/SH.XPD.TOTL.ZS

The US spends about 17% of our GDP on health care. The OECD average is about 10%.

4% of that spending is on private insurance overhead, and 2% is on pubic insurance overhead. Eliminate all of that overhead (public and private) and we would be spending 16% of our GDP on health care.

Point 1: financing per se can solve at most 6% of our health care spending, because that's what it's costing us right now.

That means if we want to match the OECD average, we would need to lower health care spending by an additional 40% to get down to the 10% of GDP average.

Since in this hypothetical, we have eliminated literally all public and private financing overhead, the only place to get that money is from providers: pharma, hospitals, device manufacturers, doctors, nurses, dentists, nursing homes, and health aids.

http://www.cdc.gov/nchs/fastats/health-expenditures.htm

Currently:
Prescription drugs are $280 billion, or 9% of healthcare spending
Hospitals are $960 billion, or 32% of healthcare spending
Physicians are $600 billion, or 21% of healthcare spending
Nursing homes are $150 billion, or 5% of healthcare spending
Medical devices are $180 billion, or 6% of healthcare spending

All together, these payments to providers are $2.07 trilion, or 70% of healthcare spending total.

Point 2: even if we eliminated literally every expense but payment to providers, we would still have to cut provider payment by 10%

To get GDP percent parity with the OECD average, even if we imagine literally zero insurance/financing/administration overhead/profit, we have to cut 40% of the $3 trillion we spend each year, or $1.2 trillion dollars.

The average OECD physician salary is around $80,000 per year. It's $190,000 in the US. Halving what physicians are paid in the US would bring us more in line with OECD physician pay, and reduce our health care expenditures by 10%.

Private hospitals are very rare in the OECD outside of the US, and for-profit hospitals are virtually unknown in the OECD outside of the US. If we reduced all hospital payments by 60%, we would save $375 billion dollars, or 12% of our health care expenses. That's 22%, out of 40% we need to find.

Here's where it starts getting difficult; up until now we've "just" been imagining absolutely cost-free healthcare financing and insurance, a 50% pay cut to all physicians, and a 60% reimbursement cut to all hospitals. And we still need to cut 18% more.

How about drugs and devices? Well, if we paid 50% less for them than we do now, we would be roughly at the OECD average, and save $150 billion, or about 5% of health care spending. That leaves 13%.

What's left to look at?

Well, Pubic Health programs are about $80 billion, or 3%.

Workers' compensation is about $45 billion, or 1.5%.

Structures and capital expenses are about $118 billion, or 4%.

R&D is about $45 billion, or 1.5%.

Together these add up to 10%, so if we eliminated them all entirely we'd get roughly to the place we're looking for. But we obviously don't want to eliminate these programs, or even cut them, really. We actually would need to find that extra 13% in provider payments, and I suspect that will have to mostly come from hospitals. (Basically the for-profit hospital is going to have to disappear.)

But wait! It gets even worse.

That's just for the health care we are currently providing. We want, in this process, to expand health care access to the 30 million uninsured Americans and the 50 million Americans who cannot afford to use their insurance because of copays and deductibles.

So, as a reminder: our goal is to reduce health care spending by 40%, while increasing the number of people who have access to health care by 25%. And even if we only cut it by slightly less than 30% by halving all physicians' salaries, cutting hospital reimbursements by 60%, and cutting drug and device prices in half, we're still asking for this health care system to perform on the order of 25% more work (probably not quite 25%, since some services are provided to the un- and under-insured currently, but not very much in dollar terms, at least). So call it 20%.

For that matter, it's not even clear to me that we have in the US the health care professionals that it will take to actually increase usage by 25%. The AMA has deliberately restricted the slots available in medical schools, with the result that we have many fewer doctors per 1000 people (2.5) than the OECD average (3.2). Even if we magically found a way to cut all of the costs we need to, do we have enough doctors to see the 80 million more people we want to have access to medical care?

Does anybody have an idea that's better thought-through than simply saying "single payer" and waving your hands?

[pnwmom]

1. What? There's not some simple solution? And you're right that we're already

facing the problem of having way too few primary care physicians -- the doctors who deliver the most basic care and cost the least.

Well, one change I've been seeing is that more nurse practitioners are being added to doctors' practices, and I've been very pleased with the care they can give. So that could be one part of the puzzle.

And we have to take control of Big Pharma. If they're going to charge crazy prices for generics, the government should set up government facility to start producing generics.

[Recursion]

2. NPs can be a huge help, particularly if we let them do more

Unfortunately, the AMA (these guys again) have limited what an NP or PA or LPN can do compared to what their counterparts in the rest of the OECD can do.

That said, WalMart's pledge to have a Nurse Practitioner in a clinic in every WalMart with a pharmacy by the end of next year should be a good thing.

[ProgressiveEconomist]

6. Yes, governent protection

and subsidy of monopoly are likely the biggest differences between US and the rest of the world when it comes to healthcare costs.

Only New Zealand is like the US in allowing commercial advertising of prescription drugs, padding the pockets of media conglomerates and Big Pharma with hundreds of billions while making medicines unaffordable for the masses.

Thanks to Dubya, Medicare is hamstrung on prescription price negotiation. Pharma companies can drive up the prices of long-established drugs with new 20-year patents by pushing "new" reformulations through the FDA. Few doctors in other countries make the hundreds of thousands common here, because medical school admission and medical licensing are not as restricted. And nurse practitioners can have their own practices in many places, which the AMA and state boards never would allow here.

[eridani]

3. Every single payer bill currently proposed features negotiating prices

--with providers, hospitals and drug companies. We pay twice per capital what every other country pays, and that money is enough to cover single payer. There is no problem at all, since we are already paying for universal care--we just aren't getting it.

[Recursion]

4. Medicare currently negotiates prices. It isn't doing it.

Why does Medicare pay so much more than every other OECD country?

You've said this in several posts now and never addressed that: why would Single Payer negotiating do better than Medicare negotiating has?

[eridani]

5. Because it coexists with a messy uncontrolled private system alongside of it

And it therefore can't save practitioners money by controlling the price of their inputs. Doctors get paid less elsewhere because malpractice costs are vastly lower, they prices of equipment and medicines are lower, and they don't carry debts from their education. Single payer would do better negotiating if it is the only game in town.

[Recursion]

11. So the obvious questions are

it therefore can't save practitioners money by controlling the price of their inputs

Why not? Why does it magically save money when it's the only system and not when it doesn't? There are doctors who only take Medicare patients. Why aren't they cheaper? Why has the "doctor fix" dragged on for 20 years and recently been made permanent?

Doctors get paid less elsewhere because malpractice costs are vastly lower, they prices of equipment and medicines are lower, and they don't carry debts from their education.

What would national single payer do about malpractice costs, equipment and drug costs, and medical education debt?

Single payer would do better negotiating if it is the only game in town.

Alternately, every single attempt to cut costs, at all, becomes politicized and vulnerable to attacks as "cutting "Medicare".

[eridani]

14. Single payer removes the incentive to sue if you have an unfavorable outcome

People in this position sue whether or not malpractice has taken place in order to pay for the extra expenses so incurred. With single payer, any further care is guaranteed, so you don't have to sue anybody to get money to pay for it.

[Recursion]

15. How so?

You seem to be ignoring punitive damages, which are the vast majority of adjudicated payments.

[eridani]

16. People need the puynitive damages to meet their extra costs

If you are guaranteed health care, you don't need to sue anyone to pay for it.

[Recursion]

17. But that's not what punitive damages are

If damages are meant to meet costs by definition they are compensatory. Punitive damages are to disincentive bad behavior, and that's where all the tort money is.

[eridani]

18. Doesn't matter. People need a lot of money to pay for ongoing bad outcomes n/t

[Recursion]

19. Physicians in Canada face essentially the same liability laws we do

What's the difference in malpractice law in the US and Canada you are seeing?

[eridani]

20. The difference is that malpractice insurance is vastly cheaper anyplace else in the world

Because patients have far less motivation to sue. If Any health care you need is guaranteed, why sue anyone to pay for the extra care necessitated by bad outcomes.?

[Recursion]

21. Because you will get money if you win?

That seems pretty obvious to me.

Punitive damages are punitive, not compensatory: you get them for going through the pain and suffering you went through, pour encourager les autres so that other providers won't do the same thing. How much the medical care to fix it costs doesn't matter.

Americans are more litigious than Canadians, I grant. So how would single payer fix that? Canadians can also sue for punitive damages. Why don't they?

[eridani]

22. Because Canadians get their health care paid for. If extra expenses due to--

--prior bad outcomes are guaranteed, there is no need to sue to get money to cover those costs.

[Recursion]

26. So, no response to punitive damages?

Nothing at all to say to that?

[1939]

33. Part of a single payer law

Should make the health care providers "agent of the government" and immune from law suits. Malpractice would then be a claim against the government to be pursued administratively. Good luck on getting that through the Democratic Party trial lawyers mafia.

[Recursion]

36. Interesting. So you've enveloped the Republicans' chief talking point

Personally I think patients should have some recourse.

[1939]

43. They would, submit a claim against the government

What do you do if the military health system, the VA, the PHS, or the Indian Health Service commits malpractice?

[LiberalArkie]

55. Plus I think that with a national health care system, most of the doctors

are federal employees aren't they? So a person would have to sue the federal government.

[FreakinDJ]

7. Where did you get those "Overhead Cost" numbers - they are wrong

4% of that spending is on private insurance overhead, and 2% is on pubic insurance overhead

We all head 16% being tossed around during the debate leading up to the passage of ACA. Bloomberg has data that shows an even higher number

More than 20 years ago, two Harvard professors published an article in the prestigious New England Journal of Medicine showing that health-care administration cost somewhere between 19 percent and 24 percent of total spending on health care and that this administrative burden helped explain why health care costs so much in the U.S. compared, for instance, with Canada or the United Kingdom. An update of that analysis more than a decade later, after the diffusion of managed care and the widespread adoption of computerization, found that administration constituted some 30 percent of U.S. health-care costs and that the share of the health-care labor force comprising administrative (as opposed to care delivery) workers had grown 50 percent to constitute more than one of every four health-sector employees.

http://www.bloomberg.com/bw/articles/2013-04-10/the-reason-health-care-is-so-expensive-insurance-companies

[Recursion]

8. CMS is kind enough to publish them

https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/index.html?redirect=/NationalHealthExpendData/

We all head 16% being tossed around during the debate leading up to the passage of ACA.

And, now that we have the ACA, we have new numbers from CMS. As of 2013, private insurance has an overhead rate of 12%; Medicare has an overhead rate of 6%. When you add them up and divide, the private insurance overhead and profit come up to 4% of our total spending ($120 billion) and Medicare/Medicaid overhead are about 2% of our total spending ($60 billion).

I don't know where Bloomberg got its numbers; CMS is pretty hard to dispute. They literally just count the dollars paid in premiums and the dollars paid out to providers.

[FreakinDJ]

9. Perhaps the methodology

CMS counts dollars paid to a doctor's office visit - they don't count the office consist of 1 Doctor, 1 Receptionist, 1 Nurse, and 2 Data Entry / Insurance Processors. Data Entry/Insurance Processors would be administrative cost

And yes I am looking over their findings and I don't see where they have broken out those cost

[Recursion]

10. That haven't broken that cost out. Hell, Medicare coding is infamously complex

So going to Single Payer doesn't remotely take that expense away.

[Vinca]

12. Price controls.

I remember when I priced colonoscopies. There was a $3,000 difference between hospitals within 20 miles of each other.

[Recursion]

13. I'm convinced that's the only real answer

And if we had them, at that point it would be much less important what our health care financing model is.

[muriel_volestrangler]

23. Where does "our goal is to reduce health care spending by 40%" (or 45%) come from?

What group are you a part of, whose goal it is to reduce spending to the OECD average?

[Recursion]

24. The fact that people complain that we spend twice as much of per capita GDP as the rest

of the OECD

If that's not a goal at all, then obviously these points aren't as important.

[muriel_volestrangler]

25. Well, you (and I mean you, personally) shouldn't complain in that fashion, then

should you? You should set yourself a more realistic goal. Who are the other people in the 'we'?

[Recursion]

27. My goal is to have healthcare that Americans can afford. What's yours? (nt)

[muriel_volestrangler]

28. I'd suggest you look at what your country can afford, and where the expense is

rather than basing it on a average of many other countries. Since the USA has a higher GDP per capita than most OECD countries, it can afford to spend more on healthcare if it chooses. It could choose to spend it on something else if it wants.

[Recursion]

29. "My country" is the USA. WTF?

What's that "your country" crap?

[muriel_volestrangler]

30. My country is the UK. (nt)

[Recursion]

31. Sorry. Expat defensiveness (nt)

[Bluenorthwest]

35. No, people are critical of the very high cost compared to the very poor return on the cost.

We spend more AND get less. That's the problem. Not that you have any idea what it is like here, obviously. You included dentistry in health care, indicating you get free dental now. The rest of us do not, I am facing an expense so large I will leave the US to have the work done. Here I would literally never be able to do it and my work life would be over until the grave.

[Recursion]

39. I don't get free dental, dude

No idea where you thought I did... But thanks for deflecting.

Crazy point... that's why I put dentists into... wait for it... expenses. Crazy, I know.

[Bluenorthwest]

51. My main point 'dude' is that it is not just the cost but the cost and what one gets in return for

the cost that is the problem in the US for most of us who live here. Which is what I said and what you, predictably evaded.

[Recursion]

52. Yep, glad you agree with me on that.

We pay too much for too low quality care. We're on the same page there.

[think]

32. Links to studies done by the CBO & others qualified groups that some might want to read

http://www.pnhp.org/facts/single-payer-system-cost

[Recursion]

38. That's all you can do?

"Read this page of links"?

Nothing, say, addressing the actual numbers I'm pointing out?

[think]

40. You got something against government & academic studies on the subject?

[Recursion]

41. I'm quoting them

And I take the time to actually quote them rather than point to their existence.

This is complicated stuff and it deserves more than "read these links".

[think]

47. I'm pointing to well researched studies on the subject. You are making assumptions based on studies

and claiming that your conclusions are facts while it's highly probable that you've not considered all the variables.

Variables like accounting, administrative, legal, billing & collection costs in the current system. The cost of treating the uninsured within the current system.

Perhaps you should take your research to some think tank working against single payer. See if they bite....

[Recursion]

48. And I've actually quoted the numbers in those studies

Feel free to do the same.

[Bluenorthwest]

34. Who is 'we' and why do you fold in dentists and dentistry when neither our current systems nor

any of the single payer systems cover dental in the way medical is covered? I assume it is there to help you make your point.

[Recursion]

37. I "fold them in" because the Center for Medicare and Medicaid Services does

And there are systems where dental is fully covered, btw, though neither Canada nor the UK are among them.

[Bluenorthwest]

42. What systems are those?

Why don't you name them? Why can they do it why we can't? No one in the US has decent dental coverage, Canadians also pay huge prices or travel abroad to get the work.

[Recursion]

44. Austria, Finland, and Poland

Dental care is actually more widely available in Finland and Poland than internal medicine is.

Why can they do it why we can't?

As I've said several times, they have a board that imposes price controls.

No one in the US has decent dental coverage

That's clearly not true.

Canadians also pay huge prices or travel abroad to get the work

Some do, sure. Finland, Poland, and Austria care about oral hygiene more, I guess.

[Bluenorthwest]

49. Oral hygiene? We are talking about oral surgeries not a cleaning.

You live in an economy where I could afford the dental I need, Mumbai prices are good. You live in fantasy land and you think you are talking facts. Do you have any idea the sums of money involved? It's not a cleaning.

[Bluenorthwest]

53. Hygiene does not mean 'health'.

Definition: conditions or practices conducive to maintaining health and preventing disease, especially through cleanliness.

synonyms: cleanliness, sanitation, sterility, purity, disinfection;

In dentistry, Hygienist is an occupation apart from Dentist. Hygienist services are covered by plans that do not cover dental, for example. I am using the word correctly.

[Recursion]

54. Actually it is the Greek word for "health"

So, yeah, that's what it means. The sense of "cleanliness" came very, very late, 1890s or so, once people realized that dirty operating wards caused infections. Most states still have a "board of mental hygiene", and that's not related to the sense of "clean" at all.

[LiberalArkie]

56. Most regular medical insurance covers teeth cleaning. But if you have to have anything

else done you need dental insurance. Usually the only ones who have good dental insurance are federal and state workers, members of large unions and executives otherwise it is big out of pocket expense. People that are in those good jobs do not realize what the normal people have to pay for dental work.

[whatthehey]

45. Again this is FUD acting as if this were an insoluble problem

Your own data shows the way. We outspend other developed nations massively, and yet are outranked in outcomes by dozens of them.

Would it not then, QED, just be a good start to pick the best combination of the above and simply copy their solution? It's already working by definition, and already affordable, relatively speaking, by demonstration.

I can pretty much guarantee whichever is chosen, it will start with negotiation with drug mfrs, procedural limits that means towns of 40,000 like my old home don't need 10 MRI providers, payments for patient care rather than procedures ordered that means MDs are still well-paid professionals but not plutocrats enriched by an incestuous referral spiral of unnecessary "tests" (coupled with medical school cost overhauls and ending artificial limits), a space for private insurers only for those wanting boutique services and queue-jumping on non-essential interventions, and a massive reduction in overhead caused by a myriad of different provider/insurer/contract networks all with different billing, coverage and in/out group rules.

[Recursion]

46. Which solution?

Canada's single payer?

France's multi-tier public-private system?

Germany's mandated co-op insurance?

The Netherlands' mandated private insurance?

The UK's publicly-run health service?

Sweden's public catastrophic insurance with individual deductibles?

You act like there's one system out there and we just are perversely not copying it like we should. Which of those would you like us to copy, and why that one and not the other?