Re:Single-payer healthcare would save $450B and 68k lives a ...
by tptacek on Friday February 21, 2020 @05:40PM
(#22387697)
I wrote this comment before reading the excellent comment 'wahern wrote, so I'm getting rid of my redundant point about pharma and admin as a percentage of overall spending.
Rather, I'd like to point out something that I haven't seen discussed. Maybe someone here can knock it down.
Health care spending increases drastically and nonlinearly after age 55. Medicare's admin overhead is in part a consequence of the cohort of patients it serves: they receive more medical services than everyone else, and so more of their medical spending goes to services relative to administrative costs.
Conversely, younger patients receive relatively few medical services, and the services they receive are much less expensive. Compared to that lower amount, fixed administrative costs are a higher percentage of their medical spending. Some admin costs scale directly with the costs of services rendered, but others don't.
As a result, it seems pretty clear that Medicare's admin overhead ratio would necessarily be higher if it covered everyone, and that any result taken by extrapolating current administrative overhead to the whole population would be dubious.
Rather, I'd like to point out something that I haven't seen discussed. Maybe someone here can knock it down.
Health care spending increases drastically and nonlinearly after age 55. Medicare's admin overhead is in part a consequence of the cohort of patients it serves: they receive more medical services than everyone else, and so more of their medical spending goes to services relative to administrative costs.
Conversely, younger patients receive relatively few medical services, and the services they receive are much less expensive. Compared to that lower amount, fixed administrative costs are a higher percentage of their medical spending. Some admin costs scale directly with the costs of services rendered, but others don't.
As a result, it seems pretty clear that Medicare's admin overhead ratio would necessarily be higher if it covered everyone, and that any result taken by extrapolating current administrative overhead to the whole population would be dubious.