If you look at the actual report, CBO does not provide any analysis to indicate how they arrived at the two incidental mentions in the report. Looks like they've just regurgitated the same old stuff.
The following is from an article on Politifact that came out shortly after the report.
Not necessarily. As the insurance industry often says -- and independent experts generally agree -- the right kind of administrative expenses may actually lead to cost savings and improved outcomes. These include disease management, wellness programs and quality improvement programs. CBO notes that a heavily managed insurance plan may spend more on overhead but may end up with lower premiums and better outcomes, whereas a lightly managed program may spend less on overhead but end up charging its policyholders more, with less positive results. By this logic, a higher-overhead plan might actually be preferable.
In addition, Henry Aaron, a health care specialist at the centrist-to-liberal Brookings Institution, suggested that over the long run, Medicare could benefit financially from having higher administrative costs in at least one area -- anti-fraud enforcement.
In other words, measuring overhead is worthwhile, but it has its limitations.
You have to take all this stuff into account as part of administrative costs and you have to recognize that the estimated $100B/year in waste, fraud & abuse in Medicare is actually part of administrative cost -- a cost that commercial insurance has little, if any, of.
I think CBO's comments in this paper were designed to mislead, however. As has so much of their commentary during the process. |
