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Wednesday, February 20, 2013

'Setting the Record Straight on Medicare's Overhead Costs'

I don't know much about the quality of the journal where this research appears, but it's still worth noting:

Setting the record straight on Medicare's overhead costs, EurekAlert: ...The traditional Medicare program allocates only 1 percent of total spending to overhead compared with 6 percent when the privatized portion of Medicare, known as Medicare Advantage, is included, according to a study in the June 2013 issue of the Journal of Health Politics, Policy and Law.
The 1 percent figure ... is based on data contained in the latest report of the Medicare trustees. The 6 percent figure, on the other hand, is based on data contained in the latest National Health Expenditure Accounts (NHEA) report.  ...
According to ... [Minneapolis-based researcher Kip Sullivan, there is] confusion about Medicare's overhead costs. "The confusion is due partly to the existence of two government reports," says Sullivan, "and partly to claims by critics of Medicare that the government fails to report all of Medicare's overhead costs." The paper addresses both sources of confusion. The article explains the difference between the yardstick used by the trustees and the one used by the NHEA and concludes both are accurate. ...
The 1 percent figure is the one that should be used to analyze several hotly debated health reform issues, including whether to expand traditional Medicare to all Americans and whether to turn Medicare over to the insurance industry, either by expanding the Medicare Advantage program of by converting Medicare to a voucher program as Rep. Paul Ryan has proposed. ... The average overhead of the health insurance industry is approximately 20 percent, he said.
The large difference between traditional Medicare's overhead and that of the insurance industry has caused some conservative critics of Medicare to assert that the federal government is ignoring numerous administrative expenditures incurred by various federal agencies that should be attributed to Medicare.
Sullivan's paper ... describes this criticism as the second major source of confusion about Medicare's overhead. Sullivan's study reports that the 1 percent figure includes all appropriate administrative expenses incurred on Medicare's behalf, including those by the IRS, the Social Security Administration, and the FBI, as well as the cost of numerous pilot projects that Congress orders CMS to conduct. ...

    Posted by on Wednesday, February 20, 2013 at 09:52 AM in Economics, Health Care | Permalink  Comments (32)


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