Why Canadian Hospitals Outperform U.S. Hospitals

From the Huffington Post:

by Co-founder, Physicians for a National Health Program, Professor, Public Health, CUNY, advisor, EvidenceNetwork.ca, and David Himmelstein Co-founder, Physicians for National Health Program, Professor Public Health, CUNY, advisor, EvidenceNetwork.ca

In many countries, bereaved families get condolence cards and flowers. In the U.S., they are also deluged with hospital bills and insurance paperwork.

That paperwork isn't merely an insult. It costs U.S. society a fortune. Take hospitals, for instance. According to research we recently published in Health Affairs, U.S. hospitals spent $215 billion in 2011 on billing and administration, a striking 1.43 per cent of GDP.

Put another way, about $1 of every $4 of U.S. hospital spending goes to bureaucracy rather than patient care.

Other countries manage modern, first-rate hospital systems for far less. While administration devoured $667 per capita annually in the U.S., we found that Canada spent only $158, Scotland $164, England $225 and the Netherlands $325.

If U.S. hospitals ran as efficiently as Canada's, the average U.S. family of four would save $2,000 annually on health care.

Moreover, U.S. hospital paperwork costs have risen sharply since 2000, even after adjusting for inflation. In contrast, administration's share of hospital budgets in Canada has actually fallen since 1999.

A generation ago, it took just one or two managers to run a U.S. hospital. Now, the CEO has been joined by "chief officers" for operations, finance, compliance, information, quality management, and more.

Each chief commands his/her own legions - hundreds of billing and registration clerks, referral managers, upcoding specialists (to translate doctors' diagnoses into the most profitable billing codes), and massive IT departments whose first commandment is "get the bill right."

Why are U.S. hospitals so inefficient? Our multiple-payer insurance system forces every hospital to negotiate rates with dozens of insurance plans, each with its own coverage rules, billing procedures and documentation requirements. And each hospital must collect deductibles, co-payments and co-insurance from tens of thousands of patients.

In contrast, Canada and Scotland -- where bureaucratic costs are lowest -- have single-payer systems that reject this kind of red tape and the need to bill for every Band-Aid. They pay hospitals simple lump-sum budgets, the way we fund local fire stations. And like fire departments, their hospitals don't need to collect from each victim of misfortune.

But the complexity of hospital billing isn't the only thing driving bureaucracy. Hospitals have been forced to add layers of business expertise in order to survive in our market-driven system.

A hospital that doesn't show an operating profit can't fund essential new investments in new equipment and cutting-edge services, or modern buildings. That means administrators have to devote resources to financial gaming like marketing lucrative services (e.g. sports medicine); billing units to squeeze every penny from insurers and patients; and strategies to recruit profitable (well-insured) patients, and avoid unprofitable (e.g. uninsured) ones.

The dismal record of for-profit hospitals illustrates the problem with running hospitals as businesses. The for-profits have higher death rates and employ fewer clinical personnel like nurses than their non-profit counterparts. But care at for-profits actually costs more, and they spend much more on the bureaucracy, a reflection of the high cost of implementing shrewd financial strategies.

Canadian and Scottish hospital administrators don't have to play financial games to assure their survival. Government grants -- rather than operating profits -- pay for new buildings and equipment. Even in France and Germany, where hospitals bill multiple payers, bureaucratic costs are modest because government directly funds most hospital investments.

England and the Netherlands provide unfortunate counter-examples. Pro-market reforms initiated during the Thatcher era have driven English hospital administrative costs sharply higher. And only U.S. hospitals have higher administrative costs than those in the Netherlands, where radical market-oriented reforms now pressure hospitals to show a profit.

Economics textbooks hold that subjecting medicine to market forces will stimulate efficiency and root out waste. But reality stubbornly refuses to obey. In health care, market-oriented policies encourage hospitals to shift resources to business strategies that boost the bottom line, but contribute nothing to care.

Dr. Steffie Woolhandler is an advisor with EvidenceNetwork.ca and co-founder of Physicians for a National Health Program. She is professor of public health at the City University of New York and lecturer in medicine at Harvard Medical School. She is also an internist at the Montefiore Medical Center in New York.

Dr. David Himmelstein is an advisor with EvidenceNetwork.ca and co-founder of Physicians for a National Health Program. He is professor of public health at the City University of New York and lecturer in medicine at Harvard Medical School. He is also an internist at the Montefiore Medical Center in New York.

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Share This Video Explaining Medicare for All

Robert Reich says, "You may have heard that Medicare is running out of money and needs to be pared back. Wrong. Medicare isn't the problem. In fact, Medicare is more efficient than private health insurance. It's the solution.

Here is the piece Robert Reich wrote in the Huffington Post to introduce his video:

Again and again the upcoming election you'll hear conservatives claim that Medicare -- the health insurance program for America's seniors -- is running out of money and must be pared back.

Baloney. Medicare isn't the problem. In fact, Medicare is more efficient than private health insurance.The real problem is that the costs of health care are expected to rise steeply.

Medicare could be the solution -- the logical next step after the Affordable Care Act toward a single-payer system.

Please see the accompanying video -- #11 in our series on ideas to make the economy work for the many rather than for the few. And please share.

Some background: Medicare faces financial problems in future years because of two underlying trends that will affect all health care in coming years, regardless of what happens to Medicare:

The first is that healthcare costs are rising overall -- not as fast as they were rising before the Affordable Care Act went into effect, but still rising too quickly.

The second is that the giant post­war baby boom is heading toward retirement and older age. Which means more elderly people will need more health care, adding to the rising costs.

So how should we deal with these two costly trends? By making Medicare available to all Americans, not just the elderly.

Remember, Medicare is more efficient than private health insurers ­­ whose administrative costs and advertising and marketing expenses are eating up billions of dollars each year.

If more Americans were allowed to join Medicare, it could become more efficient by using its growing bargaining power to get lower drug prices, lower hospital bills, and healthier people.

Allowing all Americans to join Medicare is the best way to control future healthcare costs while also meeting the needs of the baby boomer and other Americans.

Everyone should be able to sign up for Medicare on the healthcare exchanges set up under the Affordable Care Act.This would begin to move America away from its reliance on expensive private health insurance, and toward Medicare for all - a single­ payer system.

Medicare isn't a problem. It's part of the solution.

ROBERT B. REICH's film "Inequality for All" is now available on DVD and blu-ray, and on Netflix. Watch the trailer below:

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Sample Cost Calculator for Single Payer

You can use this easy calculation tool to estimate your health care costs and savings under an Oregon universal health care plan. The calculator, created by Health Care for All Texas (HCFAT) is based on the long-proposed federal bill HR 676. Once the Oregon funding is finalized, we will post a new calculator based on our own state funding plan.

The calculator can be found on our Resources page.

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New York’s Single-Payer Health Care Bill Would Save Lives, Money, Create 200,000 Jobs

From CitizenVox guest blogger J. Thomas


This month, Dr. Gerald Friedman, Chair of the Department of Economics at the University of Massachusetts at Amherst, released a new study on the potential cost savings if New York state implemented a single-payer, universal health care system. In a single-payer system, every American would be guaranteed a basic level of health care, much like Medicare guarantees health coverage to American seniors.

Among the findings from Friedman’s estimates: 98 percent of New Yorkers would save money; 2 percent of New Yorkers – those making more than $436,000 annually – would pay more via increased taxes; New Yorkers would save an average of $2,200 each year; and business savings would spur the creation of 200,000 jobs. Moreover, Friedman says, “New York’s overall economic savings from a single-payer model reduces health care spending by $45 billion.”

“This detailed economic study gives us clear proof that a universal health care plan is the right move for New York,” said Assembly Health Committee chair and lead sponsor Richard Gottfried.

It’s more urgent than ever for New Yorkers to learn about the benefits of universal health care. In December, Public Citizen Health Care Advocate Vijay Das spoke before New York legislators as part of a series of historic meetings in support of the New York Health Bill, which would extend health coverage to every New Yorker. The bill currently has 77 cosponsors (out of 150) in the New York Assembly and 19 cosponsors (out of 63) in the New York Senate.

More than 80 New York organizations have endorsed single-payer, including Physicians for a National Health Program New York Metro Chapter; HealthCare-NOW! NYC; New York League of Women Voters; Green Party; Working Families Party; New York State Black, Puerto Rican, Hispanic, and Asian Legislative Caucus; New York AFL-CIO and many other labor unions, health and consumer groups.

The report acknowledges that our current system is both inefficient and unaffordable. The political reality is that the Affordable Care Act (ACA, or “Obamacare”) was compromise legislation that fell short of providing universal health coverage. While the ACA extends the benefits of insurance to more Americans, it’s built on a weak foundation that preserves the inefficiencies of the for-profit health insurance industry.

The United States is the only country in the developed world that doesn’t guarantee health insurance to its citizens. What’s more, we spend more money on health care as a percentage of our gross domestic product than any other country in the world – rich or poor – with poorer outcomes.

There is a large and growing number of citizens who favor the move to universal health care in the United States. A new poll shows that most Americans support single-payer health care, including 80 percent of Democrats. President Obama himself backed single-payer as a state senator in Illinois.

The nation deserves universal health care and if New York leads the way on single-payer, it would be an innovative laboratory of democracy — as the states were envisioned to be by the founders of our federal system.

J. Thomas is a health policy fellow with Public Citizen’s Congress Watch.

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A Small Business Owner's Case for Single Payer

Op Ed by Small Business Owner and Health Care for All PA Past-President Dave Steil in June, 2013

Affordable alternative

Better care at a lower cost

Health care, its delivery, quality, coverage and cost is the most perplexing and challenging issue facing the business community today. There is nothing more important to a business in the management of its operations than knowing the cost of each component of those operations.

When it comes to health care protection for employees, however, those costs are difficult to understand and to control, especially for small business owners who wear many hats and must deal with day to day challenges while still finding time to ensure that the long term plan is also in place. As a small business owner, my struggle to find a balance between those responsibilities is ever present.

Since World War II health care has principally fallen upon the shoulders of business. That means that it was discretionary for business owners to provide or not provide health care to employees. Frequently, that meant a hard working individual had to depend on the employer’s health care plan being a major beneficial component of the business cost and competitive structure. When the plan failed to be beneficial, the employer was free to drop employee health care. As costs rose and competitive conditions changed, many business owners did just that. Often it was imperative for the business to remain viable.

With the passage of the Affordable Care Act (ACA) in 2010, businesses are, for the first time, required to provide health care to their employees. Businesses smaller than 50 employees are exempt but their individual employees must now buy insurance to cover themselves and their families.The total impact of these changes to the health care system is not yet known to business owners, but are much feared.

More and more business owners are asking the question, why is health care still our responsibility? Why do we continue to perpetuate a seventy year old system that is costly and leaves many hard working people without health protection of any kind? Business owners know their products and services. They are not schooled in health care administration. But, if we accept that question then we must ask, if not business, then who?

There are in reality only two answers to that question. Either every person must provide for his or her own health care protection or it must become a core function of government, just as is education. In fact government already provides close to 50 percent of all health care, through Medicare, Medicaid, Military (including VA) and government employees.

Many will reject this option without ever looking at the facts. That is regrettable and intellectually dishonest. In fact, now there is now solid data to support the concept of a State of Pennsylvania managed health care system that would cover all Pennsylvania citizens for most health care related needs.

An economic impact study (EIS) just released by Health Care 4 All PA, a Pennsylvania non-profit corporation, clearly demonstrates that health care can be provided to all citizens at much lower cost than is already being paid by business and individuals. Known as the Pennsylvania Health Care Plan (PHCP), administered by the state, it would provide comprehensive health protection by removing the significant costs associated with insurance based and directed coverage. The cost of the plan would be paid for by personal income and payroll taxes, but at a lower rate than is already being paid for health services.

For businesses there are many added benefits directly reducing the costs of doing business:

  • Lower direct costs than the cost of the insurance based system Reduced Workers Compensation costs
  • Reduced cost of general liability insurance
  • Elimination of costs to administer the insurance plan by the business
  • Equal ability to compete for employees in the job market
  • Increased ability to compete in the international marketplace
  • Elimination of legacy costs for providing retiree health care
  • Less confrontational collective bargaining
  • Clear and identifiable costs for budgeting purposes

Legislation to adopt the PHCP presents an historic opportunity to overcome the complexities and uncertainty of the Affordable Care Act and to put Pennsylvania in the forefront of advanced and enlightened health care. Nothing else that we could accomplish would create a business climate as economically attractive as the PHCP.

This is not just a health care management plan, but a major job creation engine. If the business community rally’s behind this proposal it will happen, because we, collectively, carry a powerful voice.

David Steil, Lower Makefield, is a small business owner and a former member of the state House of Representatives.

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Over 100 economists call on Vermont to move forward with universal health care

From the National Economic & Social Rights Initiative website.

Publication Date: February 26, 2015
Author: Healthcare Is a Human Right Campaign
Organization Title: NESRI and the Vermont Workers' Center

MONTPELIER, VT: A new health care financing plan and a letter signed by over 100 economists make the case for Vermont to establish what would be the first universal, publicly financed health care system in the United States. The plan and letter were delivered to lawmakers at the Vermont State House on Thursday by members of the Healthcare Is a Human Right Campaign.

The financing plan sets out a new, more equitable model for financing Vermont’s health care system that would expand access to care while lowering health care costs for low- and middle-income families. Adding to proposals released by Governor Peter Shumlin in December, the plan, which was published by the Vermont Workers’ Center and the National Economic and Social Rights Initiative (NESRI), provides data and models showing that Vermont could simultaneously guarantee health care access to all its residents, reign in the overall cost of health care, and finance the new health care system, Green Mountain Care, through progressive taxation.

The Healthcare Is a Human Right Campaign says that its financing plan not only shows that universal health care can be financed in Vermont, but that it can be financed far more equitably than the current market-based health care system.

“By moving from private, market-based insurance to public financing of universal care,” Anja Rudiger, NESRI, says, “we flip the way we pay for care: people contribute based on their ability, so that low- and middle-income people pay a smaller share of their income on health care than the wealthy – the opposite of the current system.”

Gerald Friedman, Professor of Economics at the University of Massachusetts Amherst, who advised the campaign, says, "Act 48 promised to establish in Vermont a system of universal health care that would improve the health of its people while shifting the financial burden from the poor and the sick to those able to pay. Building on the Governor’s Green Mountain Care report, the new Equitable Financing Plan shows how this promise can be realized so that Vermont can move forward to a fair and economically efficient health care system."

The financing plan was delivered to legislators along with an open letter from over 100 economists from across the country including Prof. Friedman as well as Dean Baker of the Center for Economic and Policy Research and Richard Wolff of The New School University, New York. Both the plan and the letter are responses to a sudden announcement in December by Governor Shumlin, who had long backed Green Mountain Care, that he would no longer recommend the legislature move forward with public financing.

“As economists,” the letter reads, “we understand that universal, publicly financed health care is not only economically feasible but highly preferable to a fragmented market-based insurance system. Health care is not a service that follows standard market rules; it should be provided as a public good.” The letter calls on Vermont lawmakers to “move forward with implementing a public financing plan for the universal health care system envisioned by state law.”

According to the plan, low- and middle-income families would pay much less in health care costs if Green Mountain Care was implemented. A family with an income of $50,000 per year, for example, would pay 40% less for health care costs on average under Green Mountain Care. The plan proposes taxing wealthier people’s unearned investment income in order to give a bigger break to low- and middle-income families. It also proposes implementing a graduated payroll tax that requires large employers and businesses with highly unequal salary structures to pay more than smaller and more wage-equitable businesses. The payroll tax takes into account the difference between the top 1% of wages and the bottom half of wages in each company, and lowers the tax rate for companies with more equitable wage structures.

Ellen Schwartz of the Healthcare Is a Human Right campaign says that the financing plan and letter make clear that the economics of universal health care are sound. “This plan shows that financing Green Mountain Care is not just doable, but hugely important for Vermont. It would finally guarantee access to health care for everyone in the state, and would also move us toward a much more equitable society in which we each support public systems according to our ability and each get what we need.”

The Healthcare Is a Human Right campaign is working with legislators to introduce a bill for public health care financing, building on the state’s law for universal healthcare, Act 48, which was passed in 2011 but did not include a financing plan.

Financing plan: http://www.nesri.org/resources/equitable-financing-plan-for-vermonts-universal-healthcare-system
Economists' letter: http://www.nesri.org/economists-support-universal-healthcare

Keith Brunner: keith@workerscenter.org, (802) 363-9615
Anja Rudiger: anja@nesri.org, (212) 253-1710 ext. 305 or 917-455-9544

For a summary of Oregon's proposed single payer bill click

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Doctors Actually Want Single Payer Healthcare

Doctor Carol Paris, psychiatrist and member of Physicians for a National Health Program, joins us to discuss why a single payer national healthcare system would be preferable to the current system. Become a member & Support TDPS: http://www.davidpakman.com/membership If you liked this clip of The David Pakman Show, please do us a big favor and share it with your friends...

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