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The Astonishingly High Administrative Costs of U.S. Health Care

The following article by Austin Frakt was posted on the New York Times website July 16, 2018:

Hidden from view: The complexity of the system comes with costs that aren’t obvious but that we all pay.

Medical records at a health center in Rogersville, Pa., last year. American health administrative costs are largely hidden from view of the public. Credit: Brendan Smialowski, Agence France-Presse, Getty Images

It takes only a glance at a hospital bill or at the myriad choices you may have for health care coverage to get a sense of the bewildering complexity of health care financing in the United States. That complexity doesn’t just exact a cognitive cost. It also comes with administrative costs that are largely hidden from view but that we all pay.

Because they’re not directly related to patient care, we rarely think about administrative costs. They’re high.

A widely cited study published in The New England Journal of Medicine used data from 1999 to estimate that about 30 percent of American health care expenditures were the result of administration, about twice what it is in Canada. If the figures hold today, they mean that out of the average of about $19,000 that U.S. workers and their employers pay for family coverage each year, $5,700 goes toward administrative costs.

View the complete article on the New York Times website here.

 

Categories: National Issues
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