When the administrative costs of each aspect of our multi-payer system are averaged, we spend about 15% of the health care dollar on administration. Repeated studies have shown that a single payer system that would simply do billing would reduce these administrative costs to 3%, in line with Medicare. When you include educating the public about preventive health care, continually researching the system to improve it, and providing quality assurance functions, these administrative costs rise to about 8%, in line with the administrative costs of all the other single payer countries who spend between 8 and 10% on billing, research, quality assurance, and preventive health combined.

The capacity of the single payer system to reduce administrative costs by about one half results from five basic sources. First, administrative costs are reduced by spreading out the cost of administrative systems over the entire state population. Furthermore, single-payer systems don't manage health care, saving money by eliminating this costly, and frustrating aspect of our current multipayer system. The State of Connecticut Office of Health Care Access Commission report, "Pursuing Health Care Reform In Connecticut," predicted a 65% decrease in insurer administrative costs as a result of switching from our multipayer system to a single payer system.

Second, administrative costs decline from having hospitals operate on a global budget instead of billing for each procedure for each patient. The State of Connecticut Office of Health Care Access Commission report predicted administrative savings of 14% for hospitals under a single payer system.

The third major way a single payer system reduces health care costs is by reducing physician administrative costs. The simplicity of a single payer system, which frees physicians from the burden of pre-approval and the difficulties associated with literally thousands of insurance companies and plans, would reduce the administrative costs of physicians by about 26%, according to the report of the State of Connecticut Office of Health Care Access Commission. This would allow physician fees to be reduced while maintaining income.

The fourth major way a single payer system reduces health care costs is by reducing the costs of purchasing medication and durable medical equipment, such as wheelchairs, crutches, and ventilators through bulk purchasing. Costs for medications and durable medical equipment would be reduced in the neighborhood of 30 to 40%, bringing these costs in line with the smaller countries of the industrialized world, such as Finland, who use a single payer system.

The fifth way a single payer system reduces health care costs is by coordinating and consolidating medical services and medical equipment. Under our current uncoordinated system, there is a great duplication of medical services. We have about 35% over capacity in our health care industry, and some equipment such as mammography machines, have a 300% oversupply. Although this oversupply would keep Connecticut from having lines for health care services despite the 15% increase in demand for services that a single payer system would bring, Connecticut would still have a 20% surplus of medical infrastructure. This oversupply makes each procedure more expensive, by having to spread the cost of expensive equipment such as CAT Scanners and radiation oncology machines over a less than full capacity of procedures. By reducing this oversupply to 5 to 10% through coordinated planning, our health care system can be made more efficient without influencing access to health care.

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