US HEALTH CARE REFORM
On Monday October 26,2009 I read two articles that should have a significant impact on the debate in the United States concerning health care reform. One article was by Thompson Reuters concerning waste in heath care spending. The other was a report by Calvin Woodward of The Associated Press concerning profits of health care insurers.
The author of the Thompson Reuters report was Robert Kelly, vice president of health care analytics at Thompson Reuters. The report summarizes that in the US health care system there is $650 to $800 billion of yearly wasted spending. This constitutes 1/3 of all US yearly health care costs. Since uninsured US citizens are pegged at 15% of the population in numerous publications the 33% of wasted spending represents a tremendous opportunity towards solving the health care crisis.
If only one half of the waste is eliminated this would more than cover the cost of health care for the uninsured. The Thompson Reuters white paper further breaks down the waste into several categories. The top three categories cover 76% of the cost.
- 40% unnecessary care. Overuse of antibiotics and defensive medicine.
- 19% Fraud
- 17% administrative inefficiency, redundant paper work.
Tackling and solving these three categories would result in savings of $488 to $600 billion per year. This would amount to a reduction of 20.3% to 25.0% per year.
With some health care cost already being born on uninsured citizens the saving above should be more than adequate to cover the uninsured. I would suggest that health care legislation be directed towards savings first and then with the money saved supply insurance for the uninsured.
CALVIN WOODWARD-ASSOCIATED PRESS
The headline of this report is “FACT CHECK: Health Insurers’ Profits 35th of 53”
The article states that in past years health insurers’ profits are about 6%, but the last annual profit margin was a little over 2%. The best performing health insurer was HealthSpring at 5.4%, which was below Clorox, Tupperware, and Molson and Coors beer.
This report would tend to belie the claims that health insurers make obscene profits.