Hospitals Got $100 Billion in the Stimulus Package. But A Lot of That Could Go Toward Administrative Costs
April 1, 2020 / BY ABIGAIL ABRAMS
Hospitals have spent the past few weeks racing to respond to the growing COVID-19 crisis, supplementing shortages of equipment, calling back retired personnel, and transforming entire hospital wings to care for infected patients. So when Congress included $100 billion in the stimulus package passed last week to help hospitals and other health care providers address the pandemic, it was seen as much-needed assistance.
But that’s not the whole story, health care experts say. Due to the patchwork nature of the U.S. health care system, a huge chunk of those emergency funds likely won’t go to lifesaving care or equipment, but to underwriting the astronomical administrative costs of negotiating a complicated network of private insurance providers and other bureaucratic functions.
Advocates of single-payer government health care, like Medicare for All, say that’s yet another reason to support an overhaul of the U.S. health system. “We have a privatized and fragmented healthcare system and it makes administrative costs high and consumes a huge piece of our total health spending,” says Dr. Steffie Woolhandler, a professor of public health at CUNY’s Hunter College, who supports a single-payer system.
A study co-authored by Woolhandler published in the Annals of Internal Medicine earlier this year found that administrative costs now account for about 34% of U.S. health care expenditures. That’s twice the percentage Canada spends. For hospitals alone, the mean share of expenditures devoted to administrative costs in the U.S. was 26.6%.
