Wasting Health Insurance Dollars on Administrative Costs

If you and your family have endured outrageous medical costs in the past -- and many of you reading this certainly have -- a new study has found some $230 billion in national health care dollars are spent on administrative costs, another reason the health care system is bleeding our nation's coffers as well as your pocketbooks dry.

The breakdown of administrative costs, by the numbers:

  • Physicians spend 14 percent of their income on insurance paperwork.
  • Private health care insurers earmark about 10 percent of patient premiums for billing, marketing, finances and profit.
  • Hospitals allot 9 percent for processing insurance paperwork.
  • Based on total insurance premiums that cover doctors visits and hospital costs, only 66 percent is devoted to patient care.

Certainly sobering numbers, but not surprising, given that medical problems were responsible for about half of all bankruptcies, and many of those unfortunate families were covered by health insurance too.

Much of this financial devastation would have been avoided had the conventional health care paradigm -- addicted to quick and, often, toxic cures -- focused on treating the real problem. That's the short version of my vision my staff and I work toward making a reality every day.

Health Affairs, Vol. 24, No. 6, November-December 2005: 1629-1639 Free Full Text Article

University of California, San Francisco November 10, 2005

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