On July 22, 2021

Administration is the major driver of health care costs

Dear Editor,

In Michael Long’s letter “OneCare is not the problem with Vermont’s health care” published in the July 7 edition, he asserts that “fee-for-service … is the reason health care in the U.S. is the most expensive, but not the most effective.”

That’s a questionable claim at best. Canada, for example, largely continues to rely on fee-for-service within its single-payer health care system, yet has considerably less expensive health care.

The incredibly high cost of “administering” our commercial health insurance system is certainly the major contributing factor. Consider that:

U.S. insurers and providers spent $812 billion on administration, amounting to $2,497 per capita versus $551 per capita in Canada, according to the Annals of Internal Medicine. Medscape’s 2020 survey of physicians’ reports that “paperwork and administration” took up 15.9 hours per week for family medicine doctors, while both cardiologists and neurologists spent 16.9 hours per week.

The role of administrative costs has been known for a very long time. Way back in 1991, the General Accounting Office reported to the House Committee on Government Operations that if we implemented a Canadian-style system here, “the savings in administrative costs alone would be more than enough to finance insurance coverage for the millions of Americans who are currently uninsured … [with] enough left over to permit a reduction, or possibly even the elimination, of copayments and deductibles.”

Whatever you think of the all-payer experiment that Vermont is implementing via OneCare, it won’t lower those costs. In fact, the amount of money needed to operate OneCare is itself an additional administrative cost.

Lee Russ, Bennington

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