The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

Medical Care:
Deformed by Profits and Bureaucracy

Jan 18, 2010

Why does medical insurance cost so much more in this country, while providing so much less coverage than state-run systems in other countries?

Of course, profit and CEO salaries take a sizeable chunk of money right off the top.

But the much bigger drain on the U.S. medical system is administrative cost – the complicated result of an industry where companies compete with each other to make profit.

Today, there are 13,000 different private insurance companies in the country – almost twice as many as the number of hospitals!

Each of these insurance companies has its own billing system; its own system for checking patient eligibility and verifying a doctor’s claims; its own system for paying doctors; its own sales and advertising departments to attract clients. Duplication on top of duplication! This army of private insurers gobbles up nearly 12% in administrative costs.

Outrageous when compared to Canada, where administration of the single government-run insurance system absorbs just over one% of insurance costs.

Hospitals have their own administrative costs; so do doctors’ offices, laboratories, temp agencies for nurses, etc. When all these administrative costs – insurance, doctors, hospitals, etc. – are added together, they come to about 31% of the insurance premiums.

That’s outright waste – a vast amount of money that could be used to provide medical care to every single person in this country, better medical care than we have now.

But the so-called reform coming out of the U.S. Congress does nothing to control this waste – it just opens the public purse to the same privately owned companies that created this bloated system.