Red Tape

The administrative burdens facing American healthcare providers are staggering, and every year they consume a larger share of our healthcare spending. Our administrative costs dwarf those of other countries like Canada, which spends half as much as we do on paperwork and compliance. The problem stems in large part from law: Medicare’s overbearing paperwork obligations; the requirement that HIPAA-covered providers use a reimbursement coding system with over 140,000 categories (including separate codes for everything from spaceship crashes to collisions with macaws), etc.

The paperwork burden has gotten so bad that there are now ten administrators for every doctor in the United States. A 2015 study found that unnecessary insurance paperwork alone wastes around $375 billion a year—nearly 15% of our entire national healthcare spending. The average doctor spends one-sixth of her time performing administrative paperwork (not even including writing charts or ordering lab work!) and bureaucracy is now the number one reason for doctor “burnout.”

Paperwork is threatening to drown our healthcare system. Why aren’t we fighting back?

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