Why are American health care costs so high? Experts offer up an extensive menu of explanations, which other experts dispute. The answer is a lot simpler than they make it. To paraphrase James Carville, “It’s the administrative costs, stupid.”

In 2011, the Commonwealth Fund reported that U.S. medical offices spent 20.6 hours a week on billing issues for every physician in the office. Given that 827,261 active doctors of medicine were providing patient care in the U.S., in 2015, that’s 170,415,766 total hours each week. In Ontario, billing took up only 2.5 hours a week per doctor. Had we been able to reduce our 20.6 hours to Ontario’s 2.5 hours, we would have spent 149,734,241 fewer hours on billing. If you assume the average hourly wage of the medical office person handling the billing issues is $15, a conservative assumption, that’s a savings of $2,246,013,615.

And that, of course, is for one week. Think about that. Over a 50-week year, that’s $112,300,680,750 — more than $345 for every one of the 325 million people in America. And that’s just doctor billing waste. Add in hospital billing, insurance company billing, time spent by employers’ benefit departments and by pharmacies.

Just last month, the medical journal JAMA published a study estimating that the “administrative complexity” of American health care was wasting $265.6 billion a year.

A single-payer system is the best way to reduce those costs. Maybe that’s why the experts don’t like to talk about it.

Lee Russ


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