Physicians affect the cost of healthcare for insurance thru the administrative costs and doctor’s malpractice liability insurance that will protect them from unwanted legal issues.
American Physician pays nearly $83000 per year, which is the major chunk of administrative cost. That's the cost of the time and labor it takes for physicians' employees to correspond with various insurance plans about claims, coverage and billing for patient care and prescription drugs. Researchers surveyed physicians in Ontario, who said health insurance paperwork costs them an average of $22,205 a year.
If American physicians had administrative costs that matched those of the Ontario doctors, physicians could save as much as $27.6 billion a year.
A major problem with American health care today is what policy experts call "perverse incentives." As shown in the figure above, hospital care and physician/clinical services combined account for half (51%) of the nation’s health expenditures. Doctors and hospitals bill insurers for every individual service — every office visit, MRI or hour of operating-room time — a "fee for service" model that drives health-care inflation by rewarding providers who order potentially unnecessary tests, perform potentially unnecessary surgeries and even make mistakes. A hospital readmission caused by avoidable complications just means more billable expenses.
Doctors are quick to say that much of the 30% of excess health-care spending is on "defensive medicine" — providing extra care in an effort to avoid malpractice liability.