Universal Health Care Saves Money By…

Universal Healthcare Costs

Universal Healthcare Costs

Most people assume that universal health care will save money. They may be right. May be. Canada, France, Germany, Great Britain, Japan, and Taiwan all have universal health care systems that cost 6-10% of their GDP. The US healthcare system consumes over 15% of our GDP, rising with no end in sight.  Ask yourself how might universal health care save money here?

There are basically four ways a single-payer system could save money. Each is related to simplification. Complexity is very expensive – in time, people, resources, and opportunity costs.

Downsizing Bureaucracy
Taiwan spends 2% of their healthcare budget on administration. In the USA, middlemen, red tape, bureaucracy and other non-value adding steps consume roughly 30% of our healthcare dollars. Simplification means eliminating the bureaucracy, which translates to downsizing insurance agents, billing clerks, accountants, reconcilers, utilization review officers, compliance monitors, healthcare consultants, etc.

Information Sharing
Walker and colleagues have calculated that a national health information system could save over $75 billion per year. (It would also dramatically improve medical outcomes.) With appropriate information sharing, costs would go down because: 1) Errors and adverse impacts would decrease; 2) Redundancy would be virtually eliminated; and 3) Time wastage – for both patients and providers – would be a thing of the past.

Cost-saving information sharing requires easy access to medical data by appropriate individuals, which would necessitate radical revision of our present laws and regulations.  Right now, there are legal firewalls that prevent effective national information sharing, whether erected in the name of personal security or social agendas.

Tort Reform
In addition to downsizing and information sharing, a third way that other countries reduce costs is by eliminating the practice of defensive medicine. To do that here would require, amongst other changes, scrapping the entire US tort adversary medical negligence system – a good thing I believe. Even if you are ready for this (and I certainly am), how would the Trial Lawyers Association respond?

Rationing (or whatever politically acceptable term you want)
Each country with universal health care controls – code for rations – care. For example, most impose age limits on kidney dialysis, joint replacements, or open-heart surgery. Are you prepared to have your mother rejected for a life-saving bypass operation or forced into a wheelchair for lack of a hip replacement, all because she is over a certain age?

Healthier Populace
Some countries like Great Britain with their National Health Service (NHS) are trying to save money by improving general health, viz., reducing cigarette smoking and obesity. Unfortunately, they are doing this after the fact, in a culture that feels it is entitled without limits. The NHS attempts have been met with great resistance. In the US, we also try to promote good health by legal restrictions on smoking and yet we still subsidize tobacco farming.

Bottom line:
Universal health care funded through some form of a single payer-type system could save huge sums of money if and only if:
•    The new system is uncharacteristically simple, not overlaid with complexities, extraneous issues and separate agendas;
•    We are willing to give pink slips to tens of thousands of US workers;
•    We implement an effective national health information sharing system;
•    We scrap the present medical negligence tort system and create something that actually works;
•    We accept some form of care rationing; and most important,
•    We are prepared for the backlash from numerous special interests.

I am ready to accept all the necessary consequences in order to have true universal health care. Are you?

System MD

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1 comment so far ↓

#1 The Four Anythings, A New Singing Group — Medical Malprocess on 10.26.09 at 7:30 pm

[...] has been bandied about recently as something we all want and something that will “certainly” save money.  Some politicians say universal health care when they actually mean health insurance. The fact is [...]

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