The Association of American Physicians and Surgeons explains why the common claim that Medicare has lower adminstrative costs than commercial insurers. While it’s good to know differences in accounting and the details behind the spurious claim, the bigger picture is more important:
1. Administrative costs serve a purpose. For example, an insurance company or Medicare could pay every claim, fraudulent or not. That would lower administrative costs. (Check out this post on Medicaid fraud, for example)
2. If government can do it better, then these people who run the program should start their own insurance company to compete with other insurers in the unfree market. Why do they need to force everyone to fund their organization?
