Figure 12
Kaiser Permanente (California) vs. NHS; Specialists per 100,000 Enrollees
12.3
8.3
NHS
Kais er
4.9
4.1
2.4
0.8
Pediatricians
OB/GYNs
Cardiologis ts
New Zealand's
Source: Richard G.A. Feachem, Neelam K. Sekhri, and Karen L. White, “Getting More for Their Dollar: A
guidelines for
Comparison of the NHS with California’s Kaiser Permanente,” British Medical Journal (January 19, 2002): 135–43.
end state renal
estimated administrative costs for Medicare at
son) estimated the hidden costs (inclusive of
failure programs
2 percent of total program costs, compared to
taxes) in public programs. He found that
say that "in usual
9.5 percent for private insurance and 11.9 per-
Medicare and Medicaid spend 26.9 cents for
cent for HMOs.70 Many single-payer advocates
every dollar of benefits, compared to 16.2
circumstances,
cents spent by private insurance.73
have used this estimate as an argument for
people over 75
forcing all Americans to join Medicare. Steffie
should not be
Woolhandler, a prominent member of the
Myth No. 7: National Health
Physicians' Working Group for Single-Payer
accepted." Since
Insurance Would Benefit the
National Health Insurance, and her colleagues
New Zealand has
estimate that administrative costs account for
Elderly and Racial Minorities
close to one-third of U.S. health care expendi-
no private
tures (31.0 percent), nearly twice as much as in
It is frequently argued that national health
dialysis facilities,
Canada (16.7 percent).71
insurance would benefit the elderly and
this amounts to a
reduce racial health disparities that exist in
These estimates are misleading, however.
the United States. Empirical studies show this
Determining the administrative costs of any
death sentence
not to be the case. Minorities are often dis-
government program is difficult, if not impos-
for elderly
criminated against under national health
sible. And comparisons with the private sector
insurance (see Figure 13).74 In a market where
are problematic. Part of the reason is that gov-
patients with
ernment regulators can shift administrative
prices are used to allocate resources, goods
kidney failure.
costs to physicians or patients, just as tax col-
and services are rationed by price. Willingness
lectors shift the cost of recordkeeping and
to pay determines which individuals utilize
data collection onto taxpayers. For example, a
resources. In a nonmarket system, things are
study by the American Medical Association
very different. Unable to discriminate on the
estimated that a physician spends an average
basis of price, suppliers of services must dis-
of six minutes on every Medicare claim (com-
criminate among potential customers on the
pared, say, to 20 minutes spent with the
basis of other factors. Race and ethnic back-
ground are invariably among those factors.75
patient) and the physician's staff spends an
average of one hour.72
In a recent study of Canadian Indian
groups, researchers found that all of the
Actuary Mark Litow (Milliman & Robert-
13