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To believe that administrative overhead would significantly reduce healthcare costs is just obviously false. We spend 20% of GDP on healthcare and UK spends 10%

by rsj_hn 5y ago

To believe that administrative overhead would significantly reduce healthcare costs is just obviously false. We spend 20% of GDP on healthcare and UK spends 10%. Total spend is employees * average salary per employee. Let's take a look: * For doctors, there are roughly the same number, ~2.8 per 1000, but US doctors earn three times as much as UK doctors[1]. 294K/year US versus 66K/year (UK). * The US has twice as many nurses[2] per 1000 people (17.4 per 1000) as the UK does (9.8 per 1000), and the US pays its nurses much more. The US pays 77K/year for an RN and 112K/year for an PN and 181K/year average salary for a nurse anasthesologist[3]. Nurses in the UK earn about 1/3 less, a total average of 33K/year[4] * The US has 315K pharmacists (not assistants) or roughly 1 per 1000, whereas the UK has 43K or .65 per 1000. US pharmacists make average of 140K/year[7]. UK pharmacists make an average salary of 58K per year[8]. * The US has 23,200 microbiologists (earning 69K/year). The UK has 490 (earning 52K/yr) * The US has 40 MRI machines per million. The UK has 6. * Now let's generally talk about staffing. The US employs 20 million healthcare workers with a payroll of 1 Trillion (2018)[5] an average wage of 70K (and median wage of 42K/year). This is occupational data from BLS (https://www.bls.gov/ooh/healthcare/home.htm https://www.bls.gov/ooh/healthcare/home.htm), so you can't complain about insurance employees at hospitals being included. The UK has 1.3 Million[5] in both hospitals and clinics counting both NHS and Independents, with an average salary of 24.7K/year. That means, relative to population, that the US employs 60 per 100,000 healthcare employees while the UK employs 20 per 1000. We have triple the number of healthcare workers and our health care workers earn double what the do in the UK. Now let's talk about this enormous waste in insurance that will make healthcare affordable if only we got rid of it. Total insurance overhead in the US is 7% of healthcare expenditures[8]. So if we reduced it to zero, we would pay 7% less. Whoppee. Thinking that you can keep paying doctors and nurses triple and have so many more staff and keep their high wages but merely with insurance reforms reduce healthcare spending by half is so wrong I am amazed I even need to say it. It's a terrible, misleading, evasive non-answer. What we need to cut are salaries and employment. If you don't acknowledge that, then you are not a serious participant in this discussion because you are refusing to acknowledge that this problem has tough trade offs. You are not going to solve it by "cutting waste". And this is important, because our problem, as a nation, is the general problem of professional guilds extracting too much from the rest of society. We have this problem with higher education, with finance, with healthcare. A large chunk of our professional middle class is employed by these sectors, and their well-being would be threatened if we significantly cut their wages and employment. It is not evil insurance companies, it is not shadowy billionaires, but our neighbors down the street -- the nurses, the college professors, and the X-ray technicians -- who are the ones blocking meaningful reform. And until we are willing to face that and recognize what must be done, then we will not get affordable healthcare. The incurable diseases of the modern west are all due to the professional classes extracting too much. It is not due to excessive "waste". --- [1] https://revisingrubies.com/us-vs-uk-doctors-salary/ https://revisingrubies.com/us-vs-uk-doctors-salary/ [2] https://www.healthsystemtracker.org/chart-collection/u-s-health-care-resources-compare-countries/#item-number-of-professionals-working-in-mental-health-per-100000-population-2016 https://www.healthsystemtracker.org/chart-collection/u-s-hea... [3] https://nursinglicensemap.com/resources/nurse-salary/ https://nursinglicensemap.com/resources/nurse-salary/ [4] https://www.bls.gov/opub/ted/2020/number-of-hospitals-and-hospital-employment-in-each-state-in-2019.htm https://www.bls.gov/opub/ted/2020/number-of-hospitals-and-ho... [5] https://digital.nhs.uk/data-and-information/publications/statistical/healthcare-workforce-statistics/march-2018-experimental/content https://digital.nhs.uk/data-and-information/publications/sta... [6] https://www.census.gov/library/stories/2020/10/health-care-still-largest-united-states-employer.html https://www.census.gov/library/stories/2020/10/health-care-s... [7] https://www.salary.com/research/salary/benchmark/pharmacist-salary https://www.salary.com/research/salary/benchmark/pharmacist-... [8] https://uk.indeed.com/career/pharmacist/salaries https://uk.indeed.com/career/pharmacist/salaries [9] https://time.com/5759972/health-care-administrative-costs/#:~:text=Insurers'%20overhead%2C%20the%20largest%20category,2.8%25%20of%20national%20health%20expenditures https://time.com/5759972/health-care-administrative-costs/#:....

FireBeyond 5y ago
> The US has 40 MRI machines per million. The UK has 6. Funny story - these days most DI (diagnostic imaging) machines (CT, fMRI, PET) are owned by doctors or consortiums of doctors. They are money printing machines. Doctors, and manufacturers know this. Manufacturers will find you doctors you can partner up with to buy DI assets, and get set up. You can pay off a CT machine in a couple of months, even high end fMRI in under a year. The manufacturer will finance. They'll even help you write CON applications (Certificate of Need, a nice little thing that hospitals lobbied for to reduce competition - if a new hospital wants to open up in an area it has to demonstrate that the existing community healthcare needs are being underserved. And the existing hospital gets input into the process). A nice little imaging production line. Interestingly, though perhaps unsurprisingly, doctors who own an interest in imaging equipment tend to refer their patients to it at a rate approaching 2 standard deviations higher (comparing specialties like-for-like).
CPLX 5y ago
> What we need to cut are salaries and employment. If you don't acknowledge that, then you are not a serious participant in this discussion because you are refusing to acknowledge that this problem has tough trade offs. You are not going to solve it by "cutting waste". Yes I agree. Take the windfall profit motive out of the system and you’ll see quite a bit of change. Paying doctors less sounds like a great plan. But we can start with the truly staggering amount of deadweight loss. Do you actually interact with the US health care system? Is it really that hard to understand just how much energy is wasted fucking around with just the billing component alone?
- wwtrv 5y ago
  But is it substantially lower percent wise in single payer systems like the NHS? Assuming the 7% figure is correct that does not seem like an excessive amount and event cutting it by half would only result in a marginal decrease in prices.
- rsj_hn 5y ago
  The problem with eliminating "waste" is the bang for the buck. It would take massive restructuring to cut the 7% administration in half. But then you've only saved 3.5%! So when addressing a problem, you start with the first order stuff, and then go to the second order stuff, and you do this in terms of impact, not in terms of conceptual clarity. Cut nurses and doctors, medical staff wages in half, and you save 40%. The real point here is that you can't have affordable healthcare if nurses are earning 6 figures. That's why nurses in the UK earn 40K/year. It's the price of affordable healthcare. That's the core trade off between affordable healthcare and US style healthcare. But all of a sudden now we do not have the same moral clarity as we did when we were only talking about "waste". So let's have that debate right now - the real healthcare debate, not the fake healthcare debate -- and stop pretending this is a problem that can be solved with waste while allowing nurses to keep their 6 figure salaries. It is what we call cheap moralism to decry how unfair high healthcare costs are in the US and then avoid raising any of the tough issues of what would happen to people whose livelihoods depend on those costs being so high.

by rsj_hn 5y ago

FireBeyond 5y ago

> The US has 40 MRI machines per million. The UK has 6. Funny story - these days most DI (diagnostic imaging) machines (CT, fMRI, PET) are owned by doctors or consortiums of doctors. They are money printing machines. Doctors, and manufacturers know this. Manufacturers will find you doctors you can partner up with to buy DI assets, and get set up. You can pay off a CT machine in a couple of months, even high end fMRI in under a year. The manufacturer will finance. They'll even help you write CON applications (Certificate of Need, a nice little thing that hospitals lobbied for to reduce competition - if a new hospital wants to open up in an area it has to demonstrate that the existing community healthcare needs are being underserved. And the existing hospital gets input into the process). A nice little imaging production line. Interestingly, though perhaps unsurprisingly, doctors who own an interest in imaging equipment tend to refer their patients to it at a rate approaching 2 standard deviations higher (comparing specialties like-for-like).

CPLX 5y ago

> What we need to cut are salaries and employment. If you don't acknowledge that, then you are not a serious participant in this discussion because you are refusing to acknowledge that this problem has tough trade offs. You are not going to solve it by "cutting waste". Yes I agree. Take the windfall profit motive out of the system and you’ll see quite a bit of change. Paying doctors less sounds like a great plan. But we can start with the truly staggering amount of deadweight loss. Do you actually interact with the US health care system? Is it really that hard to understand just how much energy is wasted fucking around with just the billing component alone?

wwtrv 5y ago
But is it substantially lower percent wise in single payer systems like the NHS? Assuming the 7% figure is correct that does not seem like an excessive amount and event cutting it by half would only result in a marginal decrease in prices.
rsj_hn 5y ago
The problem with eliminating "waste" is the bang for the buck. It would take massive restructuring to cut the 7% administration in half. But then you've only saved 3.5%! So when addressing a problem, you start with the first order stuff, and then go to the second order stuff, and you do this in terms of impact, not in terms of conceptual clarity. Cut nurses and doctors, medical staff wages in half, and you save 40%. The real point here is that you can't have affordable healthcare if nurses are earning 6 figures. That's why nurses in the UK earn 40K/year. It's the price of affordable healthcare. That's the core trade off between affordable healthcare and US style healthcare. But all of a sudden now we do not have the same moral clarity as we did when we were only talking about "waste". So let's have that debate right now - the real healthcare debate, not the fake healthcare debate -- and stop pretending this is a problem that can be solved with waste while allowing nurses to keep their 6 figure salaries. It is what we call cheap moralism to decry how unfair high healthcare costs are in the US and then avoid raising any of the tough issues of what would happen to people whose livelihoods depend on those costs being so high.