Because the same estimates say that the
total spending by our citizenry on federal budget and off federal budget put
together because that’s the total cost to our society goes down. And you can imagine
why — Medicare has an overhead of about 3 percent private insurance has
25 to 30 percent that’s wasted. The senator said he misspoke. But he isn’t the only Democrat to say something similar. Private insurance companies
in this country spend between 12 and 18 percent on
administration costs and they’re administering hundreds of different
private insurance plans. On the surface, administrative costs for Medicare seem
lower, but depending on how you do the math, these costs can be more than 5
percent because some of Medicare’s functions are managed by other agencies. Private plans don’t have this advantage but there’s still a range of estimates
sometimes as low as 7 percent. Some experts say administrative cost per
patients is a better measure of relative efficiency. Medicare has higher average
patient care costs so the Democrats use of total administrative costs gives a
misleading picture of relative efficiency.