One of the main arguments made by proponents of a government-run health care option is that it would have lower administrative costs than private health care plans, but as Merrill Matthews of the Council for Affordable Health Insurance explains:
Speaking of scams, the argument that Medicare’s administrative costs are 2% is one of the biggest scams out there.
Public figures for Medicare’s administrative costs count only what it takes to print reimbursement checks. Normal operating costs — rent, management, health insurance, taxes, capital to start a business and new equipment — which private insurers must include in their administrative costs, are counted elsewhere in the federal budget.
Official Medicare administrative costs simply exclude what most companies must include. No administrative cost savings exist in the public plan, and the true costs will never be counted because they’ll be hidden in the federal budget.