More on Health Care Fraud, Waste and Mismanagement

Paul Krugman’s column (2/16/07) notes regarding UnitedHealth:

“The two hospitals accuse UnitedHealth of operating a “rogue business plan” designed to avoid paying clients’ medical bills. For example, the suit alleges that patients were falsely told that Flushing Hospital was “not a network provider” so UnitedHealth did not pay the full network rate”

This was apparently not new for UnitedHealth who previously was accused of misleading patients about doctors in their network.

Insurers attempt to deny or avoid claims and to segregate risk. This means if you get sick they will try to find a reason not to pay, and may try to to remove you from their rolls and/or charge more. In a system where insurance is associated with being employed, this means if you get sick and need to stop work the insurer will try to switch you to an individual policy and charge more in an attempt to get you out of their system. Pretty neat!!

Krugman also notes that McKinsey & Company has estimated 98 Billion dollars in excess administrative costs in our health care system, more than enough to pay for insurance for the 47-48 million uninsured in our country. McKinsey also estimates we pay 66 Billion dollars in excess costs for medications–comparing our costs with those of the rest of the world. There are also other costs incurred by physicians offices trying to collect from insurers, and more yet for the chaos in our health care system.

In his Economic Scene article Robert Frank noted:

Far more troubling is its embrace of a system under which we spend more than twice as much on health care, on average, as the 21 countries in which life expectancy exceeds ours. American costs are so high in part because the reliance on private insurance multiplies administrative expenses, currently about 31 percent of total outlays.

Most health economists agree that government-financed reimbursement is the only practical way to control these expenses, many of them stemming from insurers’ efforts to identify and avoid unhealthy people. Canada’s single-payer health system, which covers everyone, spends less than 17 percent on administrative expenses.

Annual health spending in the United States currently exceeds $2 trillion. A single-payer system that did nothing more than reduce administrative expenses to the levels of other countries would save roughly $300 billion annually.

We pay a terrible price both financially and medically for our inefficient inadequate health care non-system.

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