Single-Payer System Can Save Healthcare Industry $600B: Study

Switching to a single-payer healthcare system could cut as much as $600 billion in administrative costs from healthcare spending in the United States, according to a study that was published earlier this week in the Annals of Internal Medicine.

Much of that $600 million would come from less overhead at private health insurance companies, according to a published report. That includes billing costs by doctors and hospitals, which average $465 per person in the United States, compared with $87 per person in Canada, which has a single-payer healthcare system.

Healthcare administrative costs in the U.S. totaled $812 billion in 2017, which is four times higher than the amount spent in Canada, according to the study.

On average, every person in the U.S. spends $2,479 per year on healthcare administrative costs, such as overhead, billing costs, and other bureaucratic hurdles, compared with $551 per person in Canada.

“The gap in health administrative spending between the United States and Canada is large and widening, and it apparently reflects the inefficiencies of the U.S. private insurance-based, multi-payer system. The prices that U.S. medical providers charge incorporate a hidden surcharge to cover their costly administrative burden,” said the study by researchers from Harvard Medical School, the City University of New York at Hunter College and the University of Ottawa.

As can be expected, a trade group representing health insurance companies had some pushback to the study’s results.

“Americans deserve affordable, high-quality health care, and health insurance providers deliver on that commitment,” said America’s Health Insurance Plans, in a statement. “Health insurance providers are driven to provide the greatest possible value at the lowest possible cost – this is how we compete in a market that offers consumers many coverage choices.”

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