When Lisa and Ryan Grassley brought baby Samuel home from the hospital, they laughed at one part of the bill: $39.35 for “skin to skin after C-Sec,” the charge for the privilege of holding their baby after delivery. The charge exemplifies the convoluted system of charges and record-keeping made necessary by the insurance industry system of payment for U.S. health care. In contrast, the BBC reports, “The average cost for a normal delivery or planned Caesarean section in the NHS in England in 2016 is £1755 [$2168], rising to £2582 [$3199] if there are complications.” Both charges are far below the cost of hospital delivery in the United States. And both represent the total cost — without need for a complicated breakdown of charges for everything from aspirin to diapers to holding the baby.
That’s a big difference between the British single payer system and the U.S. insurance industry system. As Minnesota Senator John Marty explains in Healing Health Care, explains
“The patchwork system of billing and paying for our health care is extremely inefficient. Health care providers have extensive administrative overhead to bill and collect payment from dozens of different health plans and a multitude of policies from each plan. … In order for hospital and nursing home billing offices to bill patients and health plans for each treatment and expense, nurses and other medical staff need to spend time itemizing treatments and procedures to send to the billing office, which is separate from the recording they do for the patient’s medical charts.”
Marty estimates that eliminating the insurance-related billing costs through a single-payer plan would save almost 15 percent of total health care costs. To illustrate, he analogizes the current health care billing system to the way public schools would function under a similar system:
“Each teacher would need to spend significant time on a daily basis calculating how much time they spent with each student, along with the amount of supplies each student consumed. Then, the school would need to allocate a portion of janitorial costs, facility costs, and administrative overhead to each student.
“Also, the school would need a billing office to bill each student’s family or their ‘education insurance plan.’ However, each family’s plan would pay for different services at different rates, with different co-payments. …”
Sound like a nightmare? That’s our current health care payment, courtesy of the insurance industry that runs it. Just managing billing costs exorbitant amounts of time and money for doctors and hospitals — time and money that would not be needed under a single-payer system.
In addition, health insurance companies spend lots of money on non-health care expenses, from advertising to marketing and sales and writing policies and billing and collections. Then there are the high salaries of health insurance industry executives — more than a million dollars a year for many executives at non-profit health plans, and even more at for-profit plans. According to Marty, administrative costs in the U.S. health care system total “as much as 31 cents of every dollar spent on health care.”
If this sounds as obscene to you as it does to me, check out Marty’s proposed solution: the Minnesota Health Plan. And read his book, Healing Health Care, available for a free download. While it is well-documented, with lots of footnotes, it’s not difficult reading. And it’s important for all of us.