The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care

by T.R. Reid

MYTH 3: “THEY ARE WASTEFUL SYSTEMS RUN BY BLOATED BUREAUCRACIES.” It seems natural to Americans that free enterprise and profit-driven markets are the most efficient way to provide goods and services. So it’s not surprising that Americans generally believe that that U.S.-style medicine—private-sector providers, financed by for-profit insurance—must be the most efficient way to provide health care. But this, too, turns out to be a myth. All the others systems in the developed world, public and private, are more frugal than ours. America’s for-profit health insurance companies have the highest administrative costs in the world. This is a major reason why we spend more for health care—and get less in return—than any other developed country. As we’ve seen, the estimates vary somewhat, but America’s health insurance industry spends roughly 20 cents of every dollar for nonmedical costs: paperwork, reviewing claims, marketing, profits, and so on. France’s private, but nonprofit, health insurance industry, in contrast, covers everybody but spends about 5 percent for administration. Canada’s universal insurance system, run by government bureaucrats, spends 6 percent on administration.As we learned in chapter 10,Taiwan adopted a leaner version of Canada’s National Health Insurance model for its national system. Taiwan’s government-run financing system has administrative costs under 2 percent.