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Tom Feran
By Tom Feran January 18, 2011

Rep. Dennis Kucinich claims a chunk of health care dollars don't go toward care

Republicans took control of the House of Representatives this month with the announced intention of dismantling the new health care law.

They started by approving rules that would permit the legislation's repeal without any requirement to make up resulting losses in revenue. The nonpartisan Congressional Budget Office estimated that the Health Care Law Act would reduce federal budget deficits by $145 billion over 10 years. Repealing the legislation (which Republicans formally labeled "the Job-Killing Health Care Law Act") would increase federal deficits $230 billion over the next decade.

Rep. Dennis Kucinich is among defenders of the health care law. One of its benefits "is to make sure that more of the health care premium dollar goes for, in fact, health care," the Cleveland Democrat said in an interview on CNN.

"You have to keep in mind," he said, "that prior to the passage of the health care reform bill, one out of $3, of every health care dollar spent, went for corporate profits, stock options, executive salaries, advertising and marketing, the cost of paperwork -- that was over $800 billion a year -- didn't go for health care."

That's a lot of expenses. PolitiFact Ohio thought it would check Kucinich’s statement.

The congressman's staff said his primary source for the breakdown was a much-cited study by Drs. Steffie Woolhandler and David Himmelstein of Harvard Medical School. Published in 2003 in the New England Journal of Medicine, the peer-reviewed study analyzed administrative costs of the U.S. health system, and found that they consume 31 percent of health spending.

Kucinich's estimate of the total tab comes from the the official estimate of total health care spending in the United States, the National Health Expenditure Accounts issued by the federal Centers for Medicare and Medicaid Services.

Their latest report, issued this month, said that health expenditures in 2009 reached $2.5 trillion. (The figure represented the slowest rate of increase in 50 years, which was attributed to people losing jobs and health insurance and deferring medical care.)

We did the math. Thirty-one percent of that comes to $775 billion -- close to $800 billion, but not "over" it.

But the 31 percent figure might be too low, and a higher percentage could push costs past $800 billion.

Kucinich’s staff noted that the study by Woolhandler and Himmelstein looked at administrative costs for the year 1999. Costs since then, they said, reflect "immense growth in (health coverage) plans more complicated to administer." Going back to 1970, the number of physicians has increased by less than 200 percent while the number of administrators has increased by 3,000 percent, according to the federal government and an analysis by Himmelstein and Woolhandler.

Woolhandler was lead researcher for the 2003 study of administrative costs. Since then, she told us,  "I think it is likely costs have gone up just a little bit as a share" of total expenditures. "The reason they haven't gone up hugely as a share is that they were so high to begin with."

So does that mean the annual cost could top $800 billion? Woolhandler told us she thinks Kucinich’s numbers are correct. But she, too, is offering an educated opinion, rather than a statement rooted in new numbers and up-to-date data.

So where does that leave him on the Truth-O-Meter?

  • What is clear is that Kucinich’s main point, that a significant amount of the money spent on health care doesn’t go toward actual care, is accurate.

  • The percentage figure and total dollars figure he cites both are close, but high, as compared to the primary source of data his staff provided us. He may not have overstated the numbers, given what has happened in the health care industry, but current data isn’t available. That’s a point that needs clarification for full understanding.

On that basis we rate his statement as Mostly True.

Comment on this item.

Our Sources

New York Times, "Taking Control, G.O.P. Overhauls Rules in House," Jan. 6, 2011

New York Times, "Republicans Are Given a Price Tag for Health Law Repeal, but Reject It," Jan. 7, 2011

Congressional Budget Office Director Douglas W. Elmendorf, letter to House Speaker John Boehner, Jan. 6, 2011

CQ Newsmaker Transcripts, TV, "Rep. Kucinich Interviewed on Fox News," Dec. 31, 2010

New England Journal of Medicine, "Costs of Health Care Administration in the United States and Canada," Aug. 21, 2003

Interview with Steffie Woolhandler, M.D., MPH, Professor of Medicine, Harvard Medical School, Jan. 10, 2011; e-mail, Jan. 12, 2011

Interview with Vic Edgerton, chief of staff for Kucinich, Jan. 7, 2011

New York Times, "Health Spending Rose in ’09, but at Low Rate," Jan. 5, 2011

U.S. Centers for Medicare and Medicaid Services (CMS), National Health Expenditure Accounts (NHEA), Jan. 06, 2011

E-mail with economist Anne Martin, principal author of NHEA report, Jan. 10, 2011

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Rep. Dennis Kucinich claims a chunk of health care dollars don't go toward care

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