[August 4, 2009 @ 4:30 am] Stuart Browning

One of the linchpin arguments of government-run health care advocates is that the government can run an insurance program more efficiently and with much lower administrative costs than the private sector. According to them, Medicare overhead is approximately 3% while private insurers have 12% (or 20% or 31% depending on who is talking) in administrative costs.

The argument is complete rubbish.

Put aside the fact that since private insurance companies have to earn a profit for their shareholders, they must also root out fraud. Medicare and Medicaid – which are rife with fraud to the tune of billions of dollars – do not because they rely on a bottomless pit of taxpayer money.

Put aside the fact that private insurers need to collect premiums while the government collects its premiums through the IRS whose administrative costs are nowhere to be found in the so-called Medicare overhead number.

The reason that the Medicare overhead number appears so low is that it is computed as a percentage of total health care costs. Since Medicare covers people over 65 whose costs are much higher than the under-65 population, the admin costs appear lower – but they are not. This is nothing more than lying with statistics.

It seems that the advocates of government-run healthcare didn’t learn anything from the history of the 20th century. Almost 20 years since the end of the Soviet Union and the collapse of world communism, the American left still seems to think that government should run businesses and that profit should be outlawed. There’s absolutely nothing different about health care from any other important good or service that the market provides.


  1. Kaz Vorpal Says:

    The best example of statistical lying in the nationalized health insurance debate is “47 million uninsured”:


    The Breakdown

    The largest, overlapping, groups of uninsured in the US include:

    9,000,000 Millionaires
    27,000,000 people who make more than $50,000 per year, but choose not to get insurance
    22,000,000 Young adults who can afford insurance, but choose not to
    14,000,000 People who can already get medicaid, but choose not to
    11,000,000 Illegal Immigrants
    23,000,000 People who are actually insured. That’s right; you’ve been lied to…surprised?
    This adds up to more than forty seven million, because of the overlap – for example young adults who are millionaires and change insurance companies fit into four categories, above.

    Let’s check out the details:

    Millionaires: The kind of health insurance you get from employers, these days, is actually pretty self-defeating…it makes you pay thousands of dollars per year, and in return you get tens of dollars worth of coverage on office visits and other routine care. The US has more millionaires than the rest of the world combined, and if you’re one, you’re not going to bother paying a premium every month, to avoid the much smaller annual checkup fee. Of the nine million millionaires, many wisely ditch routine health insurance entirely.

    $50,000+: Of course this applies, to a lesser extent, to many people who make more than $50K, twenty seven million of whom choose to be ininsured. They don’t bother with health insurance, because they can pay for checkups out of pocket, no problem. Especially if they are…

    Young Adults: Two thirds of the “uninsured” not skipping out on medicaid are between 18 and 34. Those people feel, and are statistically correct, that they’re probably not going to need the insurance, anyway. Why pay $2,000 per year for insurance when you’re going to go ten years without even getting a checkup, and have not a single ill effect from it? Sure, they’re risking the rare catastrophe…but it IS rare, and anyway that’s their own fault and choice.

    Medicaid-Dodgers: If you get on medicaid, you have to pay some small token premium…but if you choose NOT to pay that premium, and then you actually get horribly ill, you can actually sign up on the spot and still get covered, having essentially gamed the system and won anyway. So why ANYONE would bother signing up ahead of time escapes me. Fourteen million are smart enough not to.

    Illegals: I don’t like how restrictive our immigration laws are, but nonetheless they ARE among the few legitimate functions of the Federal government…and, more importantly, anyone in this country illegally is CHOOSING to live a life that will essentially make insurance impossible to legally get. There are about eleven million of these people, and “uninsured” surveys don’t filter them, in fact they sometimes specifically count them. That’s their own choice and problem. Legitimate taxpayers shouldn’t have to support them.

    The Insured: In fact, the majority of the “uninsured” who aren’t gaming medicaid ARE INSURED ANYWAY. See, the fearmongers who came up with these deceptive numbers are including anyone who changes insurance companies in a given year as being unisured for that year. This is because, legally, there is some point (even if it’s only one instant at midnight) where you are covered by neither policy. Therefore, twenty three million of the “uninsured” are actually insured for almost the entire year.

    See the rest here:


  2. Hector P Says:

    Every so often I teach statistics, and this Twainian theme is always addressed. And the point is this: unless there is an error or fabrication, the problem is the interpretation, not the statistic. Here, the charge is that the conditioning isn’t to the point that makes for accurate comparisons. The solution is to flesh out the conditions and demonstrate a better comparison. Your qualitative conditions fail in this regard.

  3. Lying with Statistics, Health Care Edition | statehousecall.org Says:

    […] Browning again debunks the myth that a single-payer system would save money on administrative costs: One of the linchpin arguments of government-run health care advocates is that the government can […]

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