but they will also reduce spending on medical care
It won't reduce government spending on medical care, spending will continue to go up. It will slow the increase in government spending on medical care, and that's something that is very important to do.
only about 65 to 80 percent of premiums are paid out in benefits by private insurance companies
80 percent is fairly common, 65 percent not so much, unless your talking about a very small company or one serving some complex niche.
And its not like all those costs are providing nothing, customer support comes out of the 20 or so percent, a larger amount is spent controlling unnecessary and fraudulent charges. Sure the covered person would rather everything be covered, but controlling fraud is important. Also part of those costs are taxes. Taxes to the government are part of the costs of the company, and they increase costs to consumer/covered person, but they are costs for a transfer to the government. Its unreasonable to include them in a comparison of costs to a government program. The fact that government agencies don't pay taxes doesn't make them more efficient.
Meanwhile Medicare doesn't really have a 97 percent benefit ratio. A lot of its costs are covered by other parts of the government. It doesn't run its own billing (it has the IRS), it cost don't include a pro-rated portion of the cost for its executive and board of directors (the office of the president, and congress). I'm not sure if the premiums pay for government office buildings where Medicare employees work, I think that comes from general taxation. (Apparently the buildings are paid for by the Public Buildings Service, parts of the GSA, but the PBS gets most of its money from the Federal Buildings Fund which is supported by rent from federal customer agencies. I think the money for buildings or parts of buildings used by Medicare employees would go to the FBF from HHS's budget not from premiums). |
