Unit2Sucks said:
Medicare is actually a pretty well run organization which has a lower administrative burden than private health insurance. If our whole government was that efficient, we might actually be able to fix some problems without confiscatory taxation but alas you will never get legislators to actually address government waste because they rely on it.
I've enjoyed reading this thread and the many thoughtful posts. But when I see the often expressed notion that Medicare is efficient I feel compelled to add my two cents, based on a career spent in health care finance.
The lower administrative burden typically quotes Medicare's 5% admin costs vs 20% in private insurance. I find this misleading for the following reasons.
1. Some private insurance outfits may have 20% overhead but the large ones don't. 12 to 15% is more typical. At least it was a few years back when I was still working and negotiating against them.
2. Most importantly, the percentage is determined by using the 'cost of care' (spending on medical care) as the denominator. The Medicare cohort has a cost of care that is 4 to 5 times that of the remaining population. If you use the more relevant metric of per capita administrative burden Medicare has a higher burden. If anyone's interested I can tell you why my experience has led me to believe that's the more appropriate measure.
3. As best as I could determine, the 5% figure is derived only from the direct Medicare portion of the HHS spending. I have to believe that there is substantial overhead spending in the remainder of the HHS budget that relates to Medicare.
4. A lot of Medicare overhead is spent in other parts of the government. Part B premiums, for example, are collected through Social Security deductions. There has to a cost associated with administrating that.
5. Finally, and this is small potatoes, but it just always irritated me, Medicare imposes costs on providers that other payers don't. The third highest paid employee in our hospital's finance department (after me, the CFO, and our controller) spent 100% of her time preparing Medicare reports and doing the complex accounting necessary to ensure that we recording our Medicare revenue accurately.
I also found much more waste and outright fraud associated with Medicare.
