Health Care’s Newest Epidemic: Red Tape

By Douglas A. Perednia, M.D.

Here’s a riddle: What costs Americans over $12 billion per year, generates more work than the nation’s thirteenth largest employer, drives millions of doctors and patients crazy, and is growing so fast it makes kudzu look stunted? The answer: the over half-billion hours of health care paperwork mandated last year by the Department of Health and Human Services (HHS). Even before ObamaCare the burden of HHS paperwork had been doubling every six years. The sheer complexity of the health care reform law guarantees a massive increase between now and 2020.

Combined with the red tape generated by insurance companies, state governments, and a proliferation of other organizations, this administrative overhead is a major reason why the cost of health care continues to grow at a rate that dwarfs increases in the nation’s gross domestic product. Our marginal health care dollars are generating less health than ever.

These insights come to us courtesy of the Information Collection Budget of the United States, an annual report that documents the amount of time Americans must spend filling out forms at the behest of Washington bureaucrats. By far the biggest paperwork offender is the tax-levying U.S. Treasury, which accounts for 84% of the 8.8 billion hours consumed. But while Treasury paperwork has grown 25% since 1999, the amount mandated by HHS has risen by 331% – far outstripping the growth rate of any other federal agency. Unchecked, HHS will generate more paperwork than all other non-Treasury federal agencies combined by 2015.

The burden of paperwork required by HHS is growing so fast that it now accounts for almost 40% of all non-Treasury paperwork, dwarfing the individual contributions of agencies like the EPA, the SEC, Homeland Security, and the Department of Labor. And it seems willing to demand more information at any price. HHS is now the nation’s foremost offender with respect to the Federal Paperwork Reduction Act, with sixty-five violations in FY 2010. This is nearly 60% of the violations generated by the entire federal government.

Just how much is 542 million hours of paperwork? Imagine 271,000 people employed doing absolutely nothing other than filling out forms at the behest of HHS. If these people were all in a single private company, it would have more employees than Albertsons. At the current rate of increase, over 540,000 full-time employees would be needed by 2015. That would make HHS paperwork the second largest employer in the country, right behind Walmart. The cost to the private sector for supplying the government with all that information? Nearly $26 billion.

Most of the people doing this work are doctors, patients, and armies of administrative personnel hired by hospitals, clinics, nursing homes, and private offices to help handle the load. All of these documents are in addition to those they have to complete for literally thousands of private health insurers, disability insurers, state governments, licensing boards, and accreditation organizations. If you want to know why your insurance premiums are rising at 9% per year, this is a big part of the answer.

Why does HHS need all of this information? Quite simply, federal regulators are now struggling to control nearly every aspect of health care – from the price and distribution of hundreds of thousands of health care-related goods and services, to the benefits to be included in private health insurance policies, to exactly what procedures doctors must follow when dealing with patients who smoke. It is an impossible task. No central authority can possibly gather and process enough information fast enough to reconcile the needs of hundreds of millions of patients, providers, and medical suppliers. Free markets are efficient precisely because such information is passed along automatically, instantly, and for free in the form of prices, inventories, and demand.

HHS’s information budget should warn us that the only way to truly reduce health care costs in the long term is by dumping government controls and returning to something that looks far more like a free market in health care goods and services. The entire system needs to be drastically simplified, and fast.

To borrow a phrase from the President, we can’t wait.


Douglas A. Perednia, M.D. is a physician and senior research associate at Cascade Policy Institute. He is author of the book Overhauling America’s Healthcare Machine: Stop the Bleeding and Save Trillions, published by Financial Times Press, and writes for the blog The Road to Hellth. Dr. Perednia is a guest writer for Cascade Policy Institute, Oregon’s free market public policy research organization.

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Posted by at 04:30 | Posted in Economy, Government Regulation, Health & Human Services, Health Care Reform, President Obama | Tagged , , , | 30 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Ladywriter

    This “red tape” as you call it is needed to insure that we get the quality of health care we demand. I, for one, will accept nothing less. After all, I am paying for it.
    Wait – I forgot – I am not paying for it. You are.
    Thanks to Obama.

  • Ronglynn

    That is not the total of it. Recently, my wife went in for her annual eye examination. The staff preparing her for the actual examnation by doctor, asked my wife the usual preliminary questions. Except this time, my wife was asked to provide her weight. My wife asked what that had to do with her eye examination. This staff person said it was because of ObamaCare. Shortly after, I went to my doctor for a 6 month check up. I notice the examination had a brand new PC in the in the examination room. The nurse and doctor both entered information into the computer during my office visit.

    These two incidents made curious on what was going on in the medical profession. I met with a health care provider and asked a few questions. This is what I was told. The medical offices, because of ObamaCare, must computerize all patient information. Eventually, all collected data will be sent to a National Government Data base. The project is scheduled to be completed sometime in 2013. The medical providers will be given Tax Rebates if they complete their part of the process early. They have no choice in this matter if they wish to continue operating. The staff person who told me that they did not like what they required by the government to do.

    If you do not believe me, I suggest you contact your medical provider and ask them directly. I am an retired government worker and I see the need for good government. However, this is not good government. I do not want some bureaucrat in Washington D.C. getting between me and my doctor. Also, with a Federal National Data Base, agencies like the FBI, IRS, CIA, NSA, DOD, etc. will be able to poke around your medical information.

    For example, if a person becomes a subject of interest to an agency like the FBI, they will attempt to find out everything to know about a person in other to build a profile. If medical records are available, they will look into those especially if it in the “interest of National Security”. Of course, the people in charge will put out disinformation that this would never happen. When I was working, we had access to State and Federal computerized Criminal Records. I know for fact that some people used the system to look up information unrelated to our employment. One bozo was even caught running criminal records checks on people he was dating. Also, if there is an online computer system, someone will eventually hack into it. Imagine your medical information in some news story if you are political activist or a celebrity.

    My congressman voted for this and he did not even read the entire bill before voting. I plan to contact him and tell him that he is responsible for what he voted for. I will tell him that ObamaCare needs to be repealed for this and a whole host of other problems with it. The discussion about our health care delivery system needs to be reopened and future action to be taken to get a system where government has a minimum involvement.

  • Anonymous

     Can you say unintended consequences doc? Of course, maybe in the case of Obozocare the consequences were intended.

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