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Comment by thatfrenchguy | Hacker News Reader

> Take "Medicare-level payments to providers". Hospitals have an operating margin of 2-5%. Medicare pays 50% less than private insurance. So doing this would require either layoffs, cutting salaries for doctors/nurses/etc, or both. This may well be the right decision for society as a whole--that's a big part of the debate here--but there's no free lunch.

I mean, admin costs at hospitals are ~25%, around half of that is directly linked to billing. Administrative costs in the US (because of course you have the same costs on the other side in the insurance side) are around 30% of cost in general, which is pretty insane.

The lack of regulation around pricing transparency and generally the lack of one-price-per-code (which the government uses to its "advantage" to get lower medicaid/medicare rates for sure) is what has caused this stupid arms race on both sides.

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Billing and insurance ("BIR") is reported at around 8.5% of revenue --- admin isn't just BIR, as you note. But replacing private insurance with Medicare doesn't drive BIR to zero; Medicare is also a claims-based system. Estimates are that you'd cut BIR by somewhere around 30-40% (of 8.5%).

Most of the savings in these kinds of reports simply comes from paying doctors less (or delivering fewer procedures, which is also a problem we have.)

Physician/nurse salary is not the major driver of the cost of healthcare. It's around 12-15% spending, depending on the methodology. Even if you force doctors to work for free, it won't meaningfully affect the cost.

It's really the overhead costs that are so Byzantine that they can't be quantified properly. Hospitals have teams of coders, insurance companies have teams of counter-coders, physicians have to waste their time on calls with insurance companies, etc.

"Medicare for all" would alleviate a _lot_ of this. It already works for the elder population, and pretty much every senior has health conditions. So extending it for everybody would result in savings. This is a no-brainer from a purely fiscal point of view.

Another way to fix the mess is to lean on the free market side: prohibit employer-sponsored insurance. Completely. All the health insurance plans must be sold on the open market to everyone.

https://nationalhealthspending.org/

BIR is 8.5% of provider spending, once you add the multiple cells up that constitute providers.

I don't think your argument is going to survive contact with the numbers here.

I just don't believe that it's correct. The Kraken hides here: Hospital Expenditures - 31.2%

I have a bit of personal experience here. I had a partner working as an endocrinologist, one of the higher-compensated medical professions. They were spending at least 1 _hour_ every day on calls with the insurance companies for prior authorization instead of seeing patients.

Some things are also weirdly broken down:

> Net Cost of Health Insurance Expenditures - 6.2% > Administration and Net Cost of Health Insurance - 7.4%

Why are they split?

I also suspect that they included some admin personnel cost in the physician/nurse salary. For my partner, their office employed a person just to deal with insurance. There is no easy way to break down these costs for small practices.

It's the CME NHE. It's literally the same data this study is based on. It's what every study of health care spending in the US is based on.

And they're not split: one row is an aggregate of subsequent rows, as you can see by simply adding them up.

This is just a colorized table view of a spreadsheet Medicare publishes every year.

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