Administrative costs … perhaps not what you think

‪Take your pick, 25% 34%; whatever you believe is percent administrative costs are of health care spending. What we don’t hear much about is ‬what causes the costs.

We assume it’s the complex insurance system, the claim filing, the unnecessary pre-certifications, questions asked and claim appeals. But it’s much more, it’s also all the processes to comply with state and federal laws and procedures to protect from lawsuits.

If you have used the system, you are aware of the paperwork. You know you are asked the same questions over and over. You know each time you visit a new doctor or facility and sometimes when returning to a facility, you must present the same enrollment IDs and information over and over. “Has your coverage changed.” is a frequent question.

Sometimes you are asked to pay your coinsurance, sometimes not. Sometimes the office looks online for your plan info, and sometimes it’s wrong.

You may realize that there is wide use of patient portals where you can see information about your condition and care, except the various portals aren’t linked to any other.

Provider networks require additional administration.

But there are three things we seem to overlook:

😷 First, there will still be a great deal of new administrative processes required for any M4A plan if we have any hope of managing costs and fraud. Existing Medicare systems simply cannot handle a universal system.

🤑 Second, and most important, we could make tremendous progress in lowering admin costs under the current system by leveraging technology and providing full information integration. Americans should be able to present a single card to any health care provider in the Country containing all their coverage and health data. All claim systems should be integrated into one.

🙄 Eliminate all provider networks and replace them with regional negotiated fee schedules. Patients could select any provider, providers could accept allowed fees or bill a predetermined percentage above the negotiated fees.


  1. Regarding the idea that all systems for claims be integrated into one system: it may be technologically possible, but I believe not realistically possible.

    I have worked for a number of bureaucracies, both large and small. Even within the same organization, computer system integration was almost always a nightmarish failure. Accounting, logistics, operations etc. each had stovepipe systems which defied integration.

    I cannot conceive of hundreds of insurance companies, state and federal health systems, hospitals etc. getting on board with one system.


    1. Yet that’s what it would take for M4A. Virtually all hospitals and other health care providers already use the Medicare system. Why couldn’t we build off that by moving data to insurers. Insurers already accept Medicare spin off data to process employer supplemental retiree coverage.


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