US study shows that health care privatization would waste billions

Wednesday, September 10, 2014

Health care privatization would waste billions US study shows

A study of international health care costs shows Canada’s single-payer system delivers some of the world’s lowest overhead costs – and that changing to private care or two-tier systems would drain billions from the public purse.

The study, funded by the Commonwealth Fund and coordinated by researchers at the City University of New York and the London School of Economics, showed the administrative costs for US hospitals were four times as high as Canada’s per capita, and $150 billion more expensive than a single payer system would be. Several European nations in the comparative study also fared poorly, where two-tier care pushed costs to as much as double Canada’s levels.

“Proponents of two-tier medicine keep telling us it will lower costs but the facts show they are wrong,” said Dr. Monika Dutt, Chair of Canadian Doctors for Medicare. “In fact, the US spends one-quarter of their hospital budgets just on administering the plethora of insurance companies, private payers and HMOs, and dumping billions into marketing and promotion.”

Canada and Scotland, whose single-payer systems fund hospitals with lump-sum payments, delivered the most efficient administration, keeping costs below $164 per capita. In contrast, in England, France, Germany and Holland, two-tier systems imposed higher costs, ranging up to $325 per capita. In the UK, administrative costs in each region correlate directly to their participation in “market-based reform” programs, with those who backed away from market “innovations” earlier faring better than those who kept them longer. The overhead costs in the Dutch system, touted by many privatization proponents as a model for Canada, were the highest of the European countries studied. None, however, matched American administrative costs, which hit $667 per capita and have been rising steadily.

“If Canada’s overhead mirrored the US, we would squander almost $17 billion each year,” Dr. Dutt said. “Dutch hospital costs would add $5.5 Billion. It’s not clear how privatization proponents think that would help.”

“For three decades our policy makers have pushed market-oriented strategies,” said Dr. Steffie Woolhandler, senior author of the study. “As a result, Americans now have the world’s costliest health care. It’s time to admit that, when it comes to caring for sick people, markets don’t work.”

The study, “A Comparison Of Hospital Administrative Costs In Eight Nations”, is published in the September issue of Health Affairs. A copy of the full study is available to media from Sue Ducat at Health Affairs (This email address is being protected from spambots. You need JavaScript enabled to view it.) or Erica Garland at GYMR (This email address is being protected from spambots. You need JavaScript enabled to view it.).

A link to an abstract of the study is available at: content.healthaffairs.org/content/33/9/1586.abstract

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For further information please call:

Sean Meagher, Canadian Doctors for Medicare, 416 820 7889