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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: Lazarus_Long who wrote (204901)	10/1/2006 5:49:51 PM
From: wonk	Read Replies (1) \| Respond to of 281500

This is of course off-topic for this forum but nevertheless perhaps you should have also quoted the very next sentence in the Forward of that Report. …This study, based in part on a technical paper by Mark Litow of Milliman, Inc., finds that Medicare’s actual administrative costs are 5.2 percent, when the hidden costs are included. In addition, the technical paper shows that average private sector administrative costs, about 8.9 percent – and 16.7 percent when commission, premium tax, and profit are included – are significantly lower than the numbers frequently cited…. The author tries to minimize the discrepancy by adding …But even though the private sector’s administrative costs are higher than Medicare’s, that isn’t “wasted money” that could go to insuring the uninsured. In fact, consumers receive significant value for those additional dollars.... Now of course this is a highly partisan report, indicting the efficacy of public health insurance, i.e., Medicare. I don’t know where he got his figures, but lets take a snapshot look at Aetna, one of the largest private health insurers. Their G&A as a percentage of benefits paid for the first 6 months of 2006 was 25.4%. If you wish to look at their G&A as a percentage of premiums paid it’s a little more favorable at 20.6%. sec.gov But neither is even close to 5.2% Insurance companies work to to maximize revenue (premiums) and minimize cost of goods sold (claims). Or more succinctly, Insurance companies are not in business to pay claims: Insurance companies are in business to collect premiums. ww