The consulting firm McKinsey & Co. has a new report (full, executive summary) that identifies the sorts of administrative simplification that together could save the health care system $265 billion annually. As illustrated by a Perspectives piece in the October 20 issue of JAMA, that sum "would be more than 3 times the combined 2019 budgets of the National Institutes of Health ($39 billion), the Health Resources and Services Administration ($12 billion), the Substance Abuse and Mental Health Services Administration ($6 billion), and the Centers for Disease Control and Prevention ($12 billon)." As Everett Dirksen and Charlie Halleck might have said back in the day, a quarter-trillion here and a quarter-trillion there, and pretty soon you're talking about real money.
So, if administrative simplification is such a good idea and the benefits are so patently obvious, why has it not happened already? McKinsey identifies the types of changes that would need to be made. Some are changes that could happen within individual organizations (assuming regulators and private accreditation agencies were on-board). Other changes would need to be implemented between organizations (same assumptions and assuming public and private antitrust enforcement would permit it). And, finally, there are market failures that will require "seismic" interventions at the industry level -- "including the necessary decision-makers and influencers from both the public and private sectors for a given intervention" (emphasis added).
By comparison, the interventions introduced by the Affordable Care Act look downright modest. But the question remains: Can we really afford to continue to pay one trillion dollars every four years for nonbeneficial administrative waste?
