Consumers do not see it because it's typically off-site from the main hospital care facilities, but believe me, the administrative savings potential is real.
The current US healthcare system has very little to do with "free markets"!
Sure, the US health care system is certainly not governed by wide open competition, transparent pricing or similar things. But it certainly has something to do with the "free markets".
The system is basically "what you get when you realize you have to insure and regulate but you never, ever do it in a centralized rational way, 'cause that would be socialism - plus you never, ever separate an 'entrepreneur' from a real or potential stream profits". Which indeed, builds the worst of all possible systems, sending risks to the consumer and profits to the investor/rent-seekers.
And from here, we could go forward to actual socialized, state-run medicine as functions adequately in most industrialized economies or back to a "wild west" system, where costs are lower, treatment is often OK and the heroin runs in large rivers as due the fatal scams(as was the US' 19th century health care reality).
The amount of administrative overhead is just absurd: a common and believable number is about 15%. This does NOT include the "shadow labor" that everyday people have to deal with, like being on hold with a billing department or insurance company, the merry-go-round of "prior authorization hell" for procedures or prescriptions, etc.
It's TERRIBLE that someone like me--conversant in business practices, ICD/CPT codes, and clinical practice in general--struggles to interpret a bill. It's literally worse than buying a car.
I can make lots of choices in life, but one of them isn't health care: if I need it--especially urgently--I'm not in a position to game out every scenario possible to minimize costs because the ecosystem is non-transparent and labyrinthine.
Which is to say that even in the most optimistic case, where single-payer forces everyone into a perfectly efficient system where nobody has to waste any time on coding or paper-shuffling and everything is perfectly streamlined, we still won't have meaningfully fixed the problem. The amounts we'd save would be a grocery-store-sale discount.
Other studies looking at only hospital costs put it at 1.43% of GDP. https://www.commonwealthfund.org/publications/journal-articl...
But we don't have to litigate this in the context of the Lancet article. That article derives much higher savings from pharmaceutical price reductions than from administrative savings. We know with some certainty what percentage of overall spending comes from pharmaceuticals, and it is a low number.
It's massive. Healthcare is byzantine on purpose. It's opaque to patients so that providers can prevent shopping around and adjust charges per patient, and it's opaque to providers from insurers to help prevent having to pay claims.
The fee schedule and structure is much more defined, simpler, and easier to abide by. So much so that software can calculate it out of the box at the time of ordering. There isn't the negotiation and level of dispute handling that private insurance companies create in their profit-maximizing behavior.
- Every visit to a doctor is a game of cat and mouse. I am never sure what bill to expect and how many bills to expect.
- Price is always inflated due to the fact that insurance company has to make money on every visit to the doctor.
- Every visit requires a Claim. Claims get filed incorrectly. Fun and games trying to call a bunch of different "departments" trying to understand the claim and why am I being charged ?
- In network/out of network game. Ohh, I am sick and unconscious but I have to make sure that the person seeing me is "in network" so that I don't get a million dollar bill. Sorry, bad luck. While you were unconscious, we called a doctor who was "out of network" and not our problem. Have fun fighting wit the insurance company.
- Why does every visit require me to show insurance ? I just wanna talk to my damn doctor. Can I not just give you some money directly ?
- I visited the doctor. Doctor has to file a claim for $x while the insurance company only allows $y. So the doctor inflates the amount of initial claim knowing that they will be reduced anyway by the insurance company. Cat and mouse game continues and finally, poor me is left with a bill that I now have to figure out. Have I already paid enough (copay, deductible, out of pocket limit) ? Lucky me.
- My employer changes my insurance company. Oh, I have to redo the entire paperwork with al my doctors. Ok I did it. Oops the doctor office still filed a claim with my previous company. I am now fighting to get that sorted.
- Doctors have no idea how much anything costs.
- Pricing has nothing/little to do with the actual cost of providing a service.
In fact medicare/medicaid have an even better mechanism to route out fraud. They can jail the medical provider for doing so.
Your last claim about fees for collecting tolls is unrelated.
Which is still less incentivization than what profit-maximizing insurance companies have.
The nice thing about the government is they are completely open and transparent with what they will pay and for what, so disputes are much less common.