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Trish Reynolds's avatar

At least they wouldn't be for profit insurance company death panels.

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tfowler's avatar

Administrative costs don't go away just because its government employees doing the administration. In fact in the US that work is often contracted out anyway. The percentage may be less for government programs in the US because the average person on Medicaid relieves more medical care than the average person on private insurance. If the medical care costs more but the administrative cost doesn't go up as much the percentage goes down.

Another reason government programs can have lower administrative costs is if they make less effort to catch fraud (although that could be considered an example of beneficial administrative costs, its not like its all waste or useless activity)Also a lot of the government's cost doesn't necessarily get counted as overhead or administrative cost. Insurance companies' advertising,premium collection and processing, etc. count as administrative costs. With the government the cost to collect taxes (and the cost to comply with them) doesn't get counted as administrative overhead. I don't think government promotion, information campaigns, and such get counted either. I think a lot of the comparisons of administrative costs are apples to oranges comparisons.Which doesn't mean that government administrative costs or more, or even that they are not lower. Economies of scale do help (although the larger American insurance companies are bigger than many national systems so they should benefit from it as well).

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