Medicare administration costs

From iGeek
Jump to: navigation, search

The left will dupe their rubes/base by claiming Medicare administration costs are a fraction of private healthcare... they don't tell you they spend more per patient or case handled. Wait, what? Here's how their prestidigitation works:

  • Private insurance is $5K per patient, and $300 of that is administrative costs, it looks like administration is 6% of costs.
  • Medicare is about $15K per patient and $400 in administrative costs for Medicare, it looks like the percent is lower on medicare (2.6%).

But in truth, it is costing you much more per patient, especially in administration. You're losing money on every patient handled, especially when you remember the person on private healthcare is getting better coverage (less rejections and delays, and more satisfaction). And this is just the tip of the flam-flam.


The problem is bigger and more complex than that. Think of things like:

  • over half of the private insurance costs are because of regulations required to be compliant with laws forced on us by medicare
  • there's another $200 in documentation costs that was pushed on to hospitals by medicare (that's driving up the cost per patient of private healthcare)
  • Medicare looks like administration is artificially low, because it uses other government agencies to do some of its bidding: like collections are done by the IRS (on their budget), fraud detection by other government agencies (on their budget), liability insurance is exempted for medicare but required for private insurance, rejection processing is reduces since they have a harder appeals process, and so on.

So sure, Medicare looks like it has low administration costs -- because things that private companies have to do and account for, they do not. And many of the things the private companies have to do, are regulations forced on them by Medicare (or other laws) that medicare is exempt from.

This is WHY many doctors don't accept medicare: medicare pushes so many of the documentation burdens on them, and is so much slower at paying. It hides the true administrative costs in other things, but just because you don't account for them, doesn't mean they're not there.

If you accounted for medicare and had the transparency required of other insurance companies, and the same liability and so on, you'd find that medicare is 4 or 5 times worse than private insurance at doing the same thing. But we'll never know, because they run on different rules -- rules on lack of transparency that you'd go to prison for if you tried in the private sector. If they're so efficient, why not comply with the same GAAP, SOX and other laws that the rest of us have to live under?


If any of this is new to you, then you should be furious that you've been duped and lied to by your politicians and media. This is basic knowledge required to have an informed debate on anything related to healthcare costs.

There are two kinds of people that believe medicare costs less per patient: (1) the gullible (2) the liars. Medicare deals with more old people, so their bills are much higher, thus administration looks lower. Medicare and private healthcare work under dramatically different rules and accounting -- if you accounted for private the way we account for medicare administrative costs, it would be cheaper. If we accounted for medicare administration costs the way we require private healthcare to be transparent, Medicare would be more expensive. Thus there is no savings by going to medicare-for-all in the administrative space. It's a lie, and anyone that claims it is someone that you know you can not trust.


Articles about Medicare. more...

Lie of Averages

OK. Here's what I call "the lie of averages". It's a math trick often used by politicians (most of the left ones) to delude their followers, into thinking something is the opposite of what it is. For example they claim California taxes are lower than other places in rate, when in dollars it is far more. Or they'll claim administration costs on Medicare is lower than private healthcare, because as a percentage it is - but only because the payouts per case are so much greater: in dollars per case handled, they're far worse. more...