Health care administration costs and "Sicko"
Topics: Health
16 Jul 2007
From: Ervan Darnell
The Michael Moore syndrome is one of the reasons I distrust everything
liberal so thoroughly. It's not just that he is a shameless
propagandist, but that most liberals I know believe what he says (yes,
I'm sure Clive will report that he knows some smarter liberals, but I
rarely run into them). I've lost track of how many times I've heard
Moore quoted as proof of something. If that's the intellectual content
of liberalism, it's bankrupt. No, of course, one shouldn't judge a
concept by its more foolish adherents, but the popularity of Moore's
films suggests the problem is widespread.
I was reading through his controversy with CNN [1], and I ran across
this as an example from Moore himself [2]:
> There is a clear way to make our health economy more efficient. We
> waste $400 billion dollars per year administering our mess of a
> private, profit-driven system. The answer is switching to a
> single-payer, Medicare-style system and taking absurd profits and
> administrative costs out of the equation. /(Steffie Woolhandler, M.D.,
> M.P.H., Terry Campbell, M.H.A., and David U. Himmelstein, M.D., Costs
> of Health Care Administration, N Engl J Med 2003;349:768-75 )/
I checked his reference [3]. Here is what it actually says:
> In 1999, health administration costs totaled at least $294.3 billion
> in the United States,
> or $1,059 per capita, as compared with $307 per capita in Canada.
> After exclusions, administration accounted for 31.0 percent of health
> care expenditures in the United States
> and 16.7 percent of health care expenditures in Canada.
First, I don't know how $294.3G became $400G (if it's an inflation
adjustment that needs to be made explicit as he's quoting a specific
source). But the second error is even worse, the Canadian system is
only saving 50% of the administrative costs (according to the article as
cited by Moore). That means, the U.S. is "wasting" (again, by Moore's
reasoning) only the difference, or $200G. And, discounting that by
$294G, we see the "waste" is only about $150G. But Moore just carries
on with $400G as the right number.
Not a direct criticism of Moore, but I suspect some of that extra
overhead is the inevitable consequences of insurance companies
negotiating (and demanding evidence for) exactly what is covered. Thus,
some of that overhead cost is actually cost containment for denying
services. Canada's cost of denied services is buried in a waiting lists
that do not show up as administrative costs in the article's analysis.
The biggest part of the overhead is not insurance company profits, but
physician compliance costs ($324 versus $259/capita, table 1). Are
physician compliance costs any lower for Medi* paperwork than Blue Cross
paperwork?
[1]
http://www.cnn.com/2007/SHOWBIZ/Movies/07/15/moore.gupta/index.html?eref=rss_latest
[2] http://www.michaelmoore.com/sicko/news/article.php?id=10026
[3]
http://www.google.com/url?sa=t&ct=res&cd=1&url=https%3A%2F%2Fcontent.nejm.org%2Fcgi%2Freprint%2F349%2F25%2F2461.pdf%3Fck%3Dnck&ei=VO-bRrXEMZTAggPz-pGGCQ&usg=AFQjCNGK5EPLqDc7_KZkxl9uzawKPpCSTg&sig2=OeYddq4VehcPL0deLWGXVA
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