[atmavatar]

That's almost entirely due to how our private insurance industry works.

Any given health provider has to deal with thousands of different insurers, and it's not uncommon for individual patients to have primary, secondary, tertiary, and even quaternary insurers the provider then has to deal with to get paid for a procedure.

To keep health care workers focused on providing health care, providers hire a bunch of administrative workers whose job is to offload the work of haggling with insurance onto cheaper workers, but because there's so many insurers, and patients have so many layers of insurance, you end up with something close to 10 administrators per doctor.

Alas, because there's so much money sloshing around in the system, and because the US government is so thoroughly corrupt with bribes from special interests, there's no movement to correct the problem. The system is unsustainable, though, so it will inevitably collapse in on itself at some point, causing a lot of misery and probably death before anything is fixed.

[tptacek]

We know this isn't true, because CMS publishes annual numbers of the net costs of all these functions, and the total cost of service delivery absolutely dominates everything else. There is definitely annoying and pointless insurance overhead; anyone who has ever gone to the doctor for a followup appointment has seen that happen. It's just not where all the money is going.

A thing that's always worth keeping in mind: retail clinical practice for non-geriatric adults is a very small fraction of all health care costs in the US, and end-of-life care is a very large fraction. Most of us only have exposure to the former, and we generalize from it, but that's not giving us an accurate picture.

[t0mpr1c3]

The administrative overhead is not trivial: probably about 25%.

Worse is the distortion of incentives for healthcare providers. The giant leaky insurance tit is there to be sucked on, creating corruption at every level.

When you are billed for a procedure you have no idea how much you are going to get charged or what you could get billed for. There could be gigantic opaque charges for things you have never heard of. Ticketmaster could only dream of such a rip-off.

Not to mention blatant over-billing for unnecessary diagnostics, etc. Every year new kickback schemes are discovered.

[tptacek]

25% of what, and where are you getting that number? JAMA studied this on an encounter-by-encounter basis and found BIR costs were in the tens of dollars for normal visits to low (100-300) for inpatient surgery.

Price transparency is a real problem. Overbilling is a real problem, so is overprescription. Important to keep in mind that those are on the provider side, not the payer.

[t0mpr1c3]

25% is perhaps on the high side of estimates, but perfectly plausible. If you prefer citations from JAMA: https://jamanetwork.com/journals/jama/fullarticle/2785479

[tptacek]

That's all administrative costs. As the abstract says, many of those costs are intrinsic to providing services.

Here's JAMA for the BIR, based directly on cost breakdowns in specific real systems:

https://jamanetwork.com/journals/jama/fullarticle/2673148

[t0mpr1c3]

Quoting from the paper you just cited:

"Administrative costs have been estimated to represent 25% to 31% of total health care expenditures in the United States, a proportion twice that found in Canada and significantly greater than in all other Organization for Economic Co-operation and Development member nations for which such costs have been studied."