Study: Single-payer system could save $375B in annual billing costs

Billing cost healthcare $471B in 2012, BMC Health Services Research said

Healthcare billing cost the U.S. economy about $471 billion in 2012, according to a recent study from BMC Health Services Research. Private insurers contributed to $198 billion, while public insurers accounted for $35 billion.

To alleviate some of these costs, researchers proposed moving from a multi-payer healthcare system to a simplified financing system--one that offers the potential for significant administrative savings. Such savings could potentially amount to $375 billion annually. This, in turn, could go toward covering the uninsured population while improving coverage for those who are under-insured.

"While these savings are significant, we estimate that the annual administrative savings under a single-payer system would be nearly nine-fold higher," the study said.

The study's researchers drew data using the U.S. National Health Expenditures, existing research and publicly reported data from 2012. They also established a standard definition of 'billing and insurance-related costs' (BIR). Their research includes physician practices, hospitals, private insurers, public insurers and "other health services and suppliers."

The researchers concluded that total BIR costs currently represent about 18 percent of U.S. healthcare spending, while non-BIR activities represent an additional 9.4 percent.

"Though some argue that shifting to a single-payer system could propagate unintended financial hazards (i.e., overutilization) and inefficiencies, as discussed previously, utilization controls can be employed in simplified financing systems while also keeping BIR costs down," the study conculded.

Not all industry advocates agree with these findings. America's Health Insurance Plans, for instance, argued that commercial insurance administration is on par with Medicare, according to Healthcare Payer NewsAdditionally, those opposed to a single-payer system argue that Medicare reimburses for a wide range of services.

While recognizing the need to drive down healthcare expenditures, certain states have pursued the idea of adopting a single-payer model. Even though Vermont recently pulled the plug on their single-payer option, other states are learning from Vermont's experience to help their models succeed.

For more:
- here's the study (.pdf)
- check out the Healthcare Payer News article

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