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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: wonk who wrote (52001)	3/5/2008 11:10:52 PM
From: Lane3	Respond to of 542534

Its long Yes, it is. I'll address it in the ayem.

To: wonk who wrote (52001)	3/5/2008 11:27:55 PM
From: TimF	Respond to of 542534

It is long, so I'll grab one small part of it. Now let’s look at what would be a typical “common size” income statement: Premiums 1.000 Benefits (0.570) Gross Profit 0.430 SG&A (overhead) (0.200) Income from Operations 0.230 Income Taxes (0.081) Net Income 0.150 SG&A is selling, general and administrative and I’m assuming a 35% effective income tax rate. Either from the top down or bottom up only 43 cents of every premium dollar goes to pay benefits (actual medical care). Compare the 20% SG&A (overhead) to the 5-6% for Medicare. Now let’s make the assumption that we went to single payer, but as a consequence the overhead percentage (using Medicare’s) doubled from 5% to 10%. I’ll note that this assumption is highly unlikely because it violates the concept of economies of scale – but I’ll grant it anyway for the sake of argument (comparing “apples to apples” I would immediately concede that pure administrative overhead will be lower for private versus public on a unit cost or per claim basis). The effective saving going from private health insurance to single payer is now 33 cents on every premium dollar. (15 profit 8 tax 10 net on overhead) Well, without borrowing for the moment to check any of your specific numbers - 1 You can't count the tax costs against the private insurance. Its a cost imposed by government, and also it doesn't just disappear its available to use for government programs (including government programs related to health care or health insurance). 2 - Paying through taxes imposes a dead weight loss for compliance costs, changed incentives, etc. Its been estimated that the marignal tax dollar imposes a 70 percent extra cost (that it costs the economy $1.70, to for the feds to spend $1). But lets assume for the moment that this figure is too high. Even if its noticeably lower than that its still a figure that is going to effect the equation here. ---- NeoLib addresses some other points from a totally different direction Message 23272023