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Just where does "Medicare for all would save $350 billion" come from? [updated]

Submitted by hipparchia on Sat, 07/18/2009 - 2:09am
Tags: 
single payer
Medicare for All

Why, from Steffie Woolhandler and David Himmelstein, cofounders of PNHP, of course!

The short answer is that they found, in a study published in 2003, that the US spends about 31% of its health care dollars on administration and Canada spends about 16.7% of their health care dollars on administration [this is all administration, not just that attributable to insurance administration]. Which means that we are spending 14.3% of our health care dollars on what is probably useless administration, and they feel that this is a low estimate. Fine-tuning the estimate a little bit yields a difference of about 15.6%.

Since most of Canada's health care financing is publicly administered and only some of our health care financing is publicly administered [Medicare, Medicaid, etc] and a goodly portion is privately administered [by parasites], they attribute this extra 15+% to the blood-sucking leeches health insurance industry.

So, now we can do a little simple arithmetic. In 2007, our total national health expenditure was estimated to be $2.24 trillion; 15.6% of that would be $349 billion [that's close enough to $350 billion for me]. The forecast NHE for 2009 is roughly $2.5-2.6 trillion; 15.6% of that would be $390-405 billion, which is why you'll sometimes see people, Bernie Sanders for one, saying we could save $400 billion if we just dump the private insurance companies.

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UPDATE 7-20-2009

I sent an email to PNHP asking if I'd got my numbers right here, and got an answer back from Dave Howell, PNHP's research associate:

The $350 billion figure comes from 2003 study in the New England Journal of Medicine, which showed that the United States spends 31% on health care administration as compared to 16% in Canada (http://www.pnhp.org/single_payer_resourc...). In 2003 dollars, the U.S. spent ~$700 billion on administration, so if we were able to cut our administrative costs to the level of Canada (so approx in half) we could save between $350-400 billion (adjusted upwards for inflation).

So, yes, the study I linked to above is the correct source, and the $400 billion is from that study, adjusted for inflation.

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This post was going to be longer, but one of the perils of blogging with cats is that they're constantly trying out new keyboard shortcuts. I'm still trying to figure out which is the one that's labeled disappear 2 hours worth of work.

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Comments

Submitted by jawbone on

figure. I heard it on The Diane Rehm Show and their Bill Moyers' appearance. I'm assuming Himmelstein has new data to support that new figure, but I'm not sure what it is, and it may well be as you write in your post. My assumption is that since Himmelstein did the first study he surely has firm data for his new figure....

Most people use $350B bcz it has the study you mention behind it, right? And it's the one "out there." Ignored by Obama and the Dem leadership, but out there among those who know something about health care costs.

I am so sorry you lost two hours of work. Drat cat! I get frustrated just losing a comment* or two taking mere minutes, but, day-ummm! One thing I've found is my second (third, fourth...) iteration of the same comment is, well, more condensed. Usually. But redoing all those URL's and other cites is tedious. Deep, profound sympathy.

Now, get us all your good info, please!

I'm still impressed as can be with your comparison of page lengths of the new House bill, Medicare, and the Canadian Medicare plans (and pleased to quote it). Says so much.

*For a couple weeks now, my cursor hasn't been following my mouse pointer. I have to push the left click very firmly to make sure the cursor follows. Very irritating in making edtions, corrections, and have to redo. Worse, my left click is now taking me back two screens instead of just one. Weird. I did recently download IE 8, but can't be sure if there's even a temporal relationship. I just changed the batteries in my keyboard, but the cursor can still refuse to follow the mouse pointer.... I keep forgetting to double check that the cursor is flashing. Grrrr.

Submitted by Anne on

or even a lengthy comment, in Word or whatever word processor you have, so that regardless of whether you "lose" it once you have copied, pasted and formatted it wherever you are posting it, you still have the original post/comment saved and easily retrieved. I actually started doing this at work, so that if someone popped into my office, it looked like I was working instead of playing on the internets... :-)

It's also nice to have a one-document source to refer back to, especially if it has facts and figures and such in it - sometimes easier to refer back to your document than scroll through posts, comments and archives looking for something you know you wrote but can't remember when.

Submitted by lambert on

Word can cause horrible formatting and character problems. Because it's Word.

Try something as simple as Notepad.

Submitted by Anne on

particular word-processing application, just advocating the idea of having some other place where posts and comments can be composed and stored to avoid losing hours and hours of work!

Submitted by hipparchia on

but i use firefox and opera, so i haven't a clue what the relationship is, if any.

you are sooooo right on the redoing of urls. grrrrrrrrrrr.

yep, others are using the updated $400 billion. i just wanted to give some linky love to bernie sanders in particular. your idea is a good one though, i need to have the definitive source.

yeah, i was impressed with the difference in the number of pages too. i wonder how many pages were in the original when canada first instituted their medicare nationwide. one more thing to go look for on the internet...