The Goal: cut the cost of US healthcare in half while achieving universal coverage and excellent quality of care without the heavy hand of big-time taxes, regulations, and bureaucracy. Hah! Yeah, I know. But gotta try.

The Situation: As a percentage of GDP, the US spends about twice as much on healthcare as other developed countries. This is a problem.See Part I of this series for details. For those who say healthcare is not a basic right, that means some people should be denied treatment, even if they die as a result. That’s fine. This post is not for you.

The Process: Identify the problem areas. Figure out why they're problem areas. Come up with fixes. Throughout the process, compare the US healthcare system to cheaper systems elsewhere to figure out what went wrong and how we can make it better.

Progress So Far: Outpatient services and healthcare administration are the biggest problem areas. Physician  profit-sharing arrangements create incentives that drive up the cost of outpatient services*.

Now for administration, which includes activities relating to planning, regulating, managing, and funding health services, e.g., coding, billing, and documenting. Long story short: the US has lots of payers who do not share the same  reimbursement systems. Between the government and private insurers, medical office personnel spend an inordinate amount of time processing bills. What is reimbursable, what is not? What type of documentation is required? What billing code should we use? How much can we charge? And that is one big reason the US spends so much on healthcare administration. Time is money.

A recent study (Papanicolas et al, 2018) compared healthcare spending in eleven developed countries and found the US spent almost three times as much on healthcare administration as the other ten countries. Before you say "single payer", chew on this: in this study, Japan, which has a multi-payer healthcare system, spent the least on administration - less than $40 a year per capita, compared to about $752 per capita in the US. And Japan has 3,500 insurance plans. What gives?

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* Physicians' political clout, via the AMA, also plays an outsized role in preventing meaningful reforms that could reduce US healthcare spending, e.g., granting nurse practitioners a bigger role in primary care. 

Next: What Japan can teach us.

Reference:

Papanicolas I, Woskie LR, Jha AK. Health Care Spending in the United States and Other High-Income Countries. JAMA. 2018;319(10):1024–1039. doi:10.1001/jama.2018.1150