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Single-Payer health care is estimated to decrease our health care cost by about 50%. And, at the same time, will cover every single person. The evidence is that all the other industrialized nations spend about 50% less. In our analysis, we found about 41% savings. Let’s look at the numbers.
The total US health care market is about 3 trillion. Here is how we can cut that price in half. The insurance companies bring in about 783 billion dollars per year. The government allows them to have 20% of that as overhead (single payer is about 2% overhead). So, that leaves 156 billion going to 783 insurance companies and the rest of the money going to care. The industry has about 530,000 employees. That means the insurance companies bring in about 294k per employee. If we reduced the overhead from 20% to 2% we would save 140 billion in administrative cost.
We spend about 383 billion dollars in the drug market. We pay six to sixteen times for our drugs than anywhere else in the world. If we went in the middle, and paid 11 times less on drugs. We would save about 349 billion. Notice that these aren’t percentages. These are magnitudes.
In addition, we spend way more than any other country on drugs and medical devices. Insurance companies have lower bargaining power than say the country of England. The reduced leverage means Americans pay six to sixteen times what other countries pay for the same drugs. This is ironic, since we manufacture and invent a lot of these products.
The medical device industry brings in about 136 billion dollars per year. In the United states, we pay 3 to 10 times more than any other country. So, if we go in the middle and use the number 6.5 times less. We would pay 116 billion less than we do now.
Hospitals bring in about 1 trillion dollars. They employ around 5.5 million people in about 2,900 businesses. I couldn’t find great numbers, but it looks like US hospitals are at least 3 times more expensive than anywhere else in the world. This is a very conservative number. This would save about 666 billion.
Insurance Savings: 140 billion Drug Savings: 349 billion Medical Devices: 116 Billion Hospitals: 666 Billion Total Savings: 1.2 Trillion in savings per year. So, the savings we came up with were closer to 41%. A more comprehensive analysis would push these numbers higher.
Most economists cut this number in half because they want to be really conservative. Economists think there is nothing worse than not being able to save what you thought you could. If the markets were free, these costs would go down much more. Health care would no longer be treated like royalty, but would become more like competitive industries like fast food or farming.
http://www.ibisworld.com/industry/default.aspx?indid=1324 http://articles.latimes.com/2012/mar/06/business/la-fi-mo-u.s.-medical-prices-high-20120306 http://www.slate.com/articles/news_and_politics/politics/2015/03/america_s_hospitals_our_system_lets_big_hospitals_charge_exorbitant_prices.html http://www.ibisworld.com/industry/default.aspx?indid=1587 http://www.qmed.com/news/why-medical-technology-so-expensive-united-states http://www.statista.com/statistics/248676/projected-size-of-the-us-medical-device-industry/ http://healthcare.globaldata.com/media-center/press-releases/pharmaceuticals/us-pharmaceutical-market-value-will-approach-550-billion-by-2020-says-globaldata http://www.huffingtonpost.com/entry/americans-pay-more-for-drugs-than-anyone-in-the-world_561bda8fe4b0e66ad4c89449