Improved Efficiency with Single-Payer

An improved administrative efficiency of at least 15% will be realized with single-payer, which has only one, simple health insurance plan. More of the money intended for health care will be spent on health care.

Summary of the data that is provided below

Administrative costs about 1/3 (an estimated 31%; conservatively: 25-30%) of total health care spending!
Administrative efficiency savings = $300 to $400 billion (update for 2009-2010: over $400 billion)
Cost to cover uninsured = est. $100 billion (update for 2009-2010: est. $150 billion)

Conclusion

We need to implement the significantly improved administrative efficiency of single-payer.

Data

• An in-depth analysis_pdf of all administrative costs associated with health care was done by Woolhandler, Campbell, and Himmelstein . The analysis compared Canada and the United States. — New England Journal of Medicine 8-21-2003 August 21, 2003.
  • The study is based on a consideration of all health system administration, not just the overhead of the hundreds of private insurers. For example, physicians and hospitals must have large billing staffs to deal with the private health insurance companies.
  • The Calculation The result of this thorough study is that about 31%, roughly a third, of U.S. health care spending goes for administration. The total health care spending is about $2.2 trillion. Therefore, moving to the improved efficiency of single-payer that saves at least half of the roughly $700 billion of administrative costs will provide at least $350 billion that can then be spent on health care instead of administration.
• Cost to Cover Uninsured A very rough figure for covering the uninsured is $70 billion per year based on multiple sources. I rounded that to $100 billion for this web page.
  

Further reading:

The following additional studies do not include all costs, compared to the in-depth analysis above:

• One economist estimates in this [pdf] file a roughly 10% difference between single-payer and the current methods of financing.
• Another economist estimates about 14%¹.