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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.
+ May 2009
+ May 2008
+ May 2007