A much-beloved talking point of the Obamacare crowd, particularly those pushing the public option, is that Medicare (our proto-public option) is more efficient than the private insurance industry and that this efficiency reduces adminstrative costs. Jeffrey H. Anderson suggests a good response to this line of BS:
The next time someone alleges that government-run health care is cheaper because of “lower administrative costs,” these numbers would be good ones to have at the ready: $60 billion in annual Medicare fraud, $8 billion in combined annual profits for America’s ten largest insurance companies.
In fact, Medicare fraud is one of organized crime’s biggest cash cows:
As 60 Minutes reported last week, Medicare fraud is rampant and has now replaced the cocaine (ahem) business as the major criminal activity in South Florida.
The mob’s take is an estimated $60 billion, paid by American taxpayers because Medicare is so “efficient.” Meanwhile, no insurance company boasts profits exceeding five percent of that amount. And the top ten COMBINED make only a little more than ten percent of Medicare’s huge fraud losses.
But what about the insurance industry’s “giant admin costs”? Well, first of all, the industry’s administrative costs have been wildy exaggerated by the Democrats. The actual figure is only about nine percent. More importantly, much of those “giant admin costs” go to preventing fraudulent claims.
Medicare should have such problems.
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