Are Medicare Administrative Costs Cheaper?

One of the persistent arguments for a government health care plan has been the lower administrative costs associated with Medicare compared with government plans. This has been a contentious issue, with others arguing this is simply not true. Well, is it?

The American Medical Association reports that Medicare administrative costs account to 5.2 percent of public programs versus 14.1 percent of private programs. Aha, we'd all save money if we went to a public program!!

Not so fast, sport! The AMA points out to the unfair comparisons in those estimates. An excerpt:

Perhaps the most obvious shortcoming of many estimates is that they ignore unreported spending on administration of government programs. Such uncounted administrative costs are especially evident in the Medicare program and include:
• Tax collection to fund Medicare—this is analogous to premium collection by private insurers, but whereas premium collection expenses of private insurers are rightly counted as administrative costs, tax collection expenses incurred by employers and the Internal Revenue Service do not appear in the official Medicare or NHE accounting systems, and so are usually overlooked
• Medicare program marketing, outreach and education
• Medicare program customer service
• Medicare program auditing by the Office of the Inspector General
• Medicare program contract negotiation
• Building costs of the Centers for Medicare & Medicaid Services (CMS) dedicated to the Medicare program
• Staff salaries for CMS personnel with Medicare program responsibilities
• Congressional resources exhausted each year on setting Medicare payment rates for services

There are other methodological issues - follow the link above for more.

Quote of the Day: Those Dirty Dirty Chevy Volts

I found this fascinating ... and actually rather logical when you think about it. If you haven't been hearing the buzz, the Chevy Volt is a new plug-in hybrid, that is its a car that runs on a battery that you can plug into an electrical outlet to recharge.

[Driving the Chevy Volt] won't be "petroleum-free" in much of the country -- because so many utilities use heavy fuel oil to generate that electricity. At current electricity-production levels, these plants emit as much as hundreds of thousands of cars on the road each day. If a few thousand well-meaning dupes plug a few thousand new Chevy Volts into electrical outlets (especially in urban centers), you could actually add millions of pounds of dangerous, dirty, unregulated pollution and carbon into the air we breathe -- possibly more pollution than would be offset by putting the Volts on the road.That's if the electricity grid can handle the added load. In fact, all across the nation, the grid is fragile, antiquated and maxed out.

Another reminder to watch out for green fakes ...

Hat Tip: American Public Media's Marketplace