Time to end co-pays

They are one of many reasons that U.S. health care has the world's highest overhead costs

By David Cay Johnston
Al Jazeera America, Sept. 8, 2014

American hospitals spend a huge and growing share of their revenue on overhead, a study published today in Health Affairs shows. Getting those costs down should be a national priority.

American hospitals on average spend 25.3 cents out of each dollar of revenue on overhead, with for-profit hospitals spending 27 percent and nonprofits a bit below the average.

By contrast, the Netherlands and England, which have the next highest overhead costs, spend 19.8 percent and 15.5 percent, respectively. Both are moving toward market-based financial models, so as with the U.S. overhead costs are likely to rise.

Compare Canada and Scotland, which have single-payer health care systems. Their hospital administrative costs are half those in America. 

The new study helps explain why for each $1 the 33 other countries with advanced economies spend per person on universal health care, the United States spends $2.64 — and yet more than one-fifth of Americans has no or poor health insurance.  A significant reason America’s health care system is so expensive and inefficient turns out to be those annoying co-pays. 

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David Cay Johnston, an investigative reporter who won a Pulitzer Prize while at The New York Times, teaches business, tax and property law of the ancient world at the Syracuse University College of Law. He is the best-selling author of “Perfectly Legal,” “Free Lunch” and “The Fine Print” and editor of the new anthology “Divided: The Perils of Our Growing Inequality.”