SeniorJournal.com - Daily News for Senior Citizens

  FRONT PAGE • Aging • Health • Alzheimer's - Mental • Nutrition • Medicare & Medicaid • Politics  • Fitness  • Social Security • Alerts • Sex Health • Features • Retirement • Elder Care  >Search  >Senior Links

[NavBar.htm]

Senior Journal: Today's News and Information for Senior Citizens & Baby Boomers

More Senior Citizen News and Information Than Any Other Source - SeniorJournal.com

• Go to more on Medicare or Medicare Drug Program More Senior News at SeniorJournal.com on the Front Page

 
 
Follow on  and 

E-mail this page to a friend!

Medicare News

Traditional Medicare’s Administrative Cost – 1%; Private Company Medicare Advantage – 6%

Setting the record straight on Medicare's overhead costs: New study finds surprising results

Feb. 20, 2013 - The traditional Medicare program allocates only 1 percent of total spending to overhead compared with 6 percent when the privatized portion of Medicare, known as Medicare Advantage, is included, according to a study in the June 2013 issue of the Journal of Health Politics, Policy and Law.

The 1 percent figure includes all types of non-medical spending by the Centers for Medicare and Medicaid Services, plus other federal agencies, such as the IRS, that support the Medicare program, and is based on data contained in the latest report of the Medicare trustees. The 6 percent figure, on the other hand, is based on data contained in the latest National Health Expenditure Accounts (NHEA) report.

The journal article, written by Minneapolis-based researcher Kip Sullivan, finds that the gap between the two measures has been growing over the last two decades as enrollment in private Medicare plans has risen.

"The high administrative costs of the privatized portion of Medicare are no surprise," says Sullivan. "What's surprising is that the high administrative costs of the Medicare private insurance companies haven't provoked a debate about whether spending more money on insurance industry overhead is a good use of scarce tax revenues."

According to Sullivan, the low attention given to this issue is caused in part by confusion about Medicare's overhead costs.

"The confusion is due partly to the existence of two government reports," says Sullivan, "and partly to claims by critics of Medicare that the government fails to report all of Medicare's overhead costs." The paper addresses both sources of confusion.

 

Related Archive Stories

 
 

Seniors to See Lower Costs in Medicare Drug, Advantage Plans in 2014, Says CMS

Agency also says seniors getting greater value and improved payment accuracy in proposed 2014 payment and policy updates

Feb. 16 , 2013


 
 

Read the latest news
> Medicare
> Senior Politics
>
Today's Headlines

 

The article explains the difference between the yardstick used by the trustees and the one used by the NHEA and concludes both are accurate. The trustees' measure counts as overhead only those administrative expenditures that support the traditional fee-for-service Medicare program, in which approximately three-fourths of all Medicare beneficiaries are enrolled.

The NHEA measure takes the trustees' measure and adds to it the overhead of insurance companies that participate in Medicare Advantage and that sell stand-alone Part D drug coverage.

"The issue isn't whether one yardstick is more accurate than the other," Sullivan explains. "The issue is when it's appropriate to use one measure instead of the other."

The 1 percent figure is the one that should be used to analyze several hotly debated health reform issues, including whether to expand traditional Medicare to all Americans and whether to turn Medicare over to the insurance industry, either by expanding the Medicare Advantage program of by converting Medicare to a voucher program as Rep. Paul Ryan has proposed.

"Total spending for any type of insurer, public or private, consists of medical and administrative expenditures," explains Sullivan. "If you want to know whether Medicare would cost more or less if it were turned over to insurance companies, you first have to determine what Medicare spends on medical care and administration and you have to do the same for the health insurance industry."

The proper yardstick to use to measure Medicare's overhead in analyses of issues such as these would be the trustees' measure – 1 percent. The average overhead of the health insurance industry is approximately 20 percent, he said.

The large difference between traditional Medicare's overhead and that of the insurance industry has caused some conservative critics of Medicare to assert that the federal government is ignoring numerous administrative expenditures incurred by various federal agencies that should be attributed to Medicare.

Sullivan's paper, "How to think clearly about Medicare administrative costs: Data sources and measurement," describes this criticism as the second major source of confusion about Medicare's overhead. Sullivan's study reports that the 1 percent figure includes all appropriate administrative expenses incurred on Medicare's behalf, including those by the IRS, the Social Security Administration, and the FBI, as well as the cost of numerous pilot projects that Congress orders CMS to conduct.

Sullivan's notes that many liberals are also confused about what Medicare's overhead costs are. "With so much confusion on both sides of the political spectrum, it's fair to say a useful debate about whether to expand or contract the traditional Medicare program has yet to take place in this country," he said.

Sullivan is a lawyer and member of the Minnesota chapter of Physicians for a National Health Program, which had no role in funding the study.

Notes:

"How to think clearly about Medicare administrative costs: Data sources and measurement," Kip Sullivan, J.D., Journal of Health Politics, Policy and Law, Vol. 38, No. 3, June 2013. Advance version published online Feb. 15, 2013. DOI 10.1215/03616878-2079523

Physicians for a National Health Program is a research and education organization of more than 18,000 doctors who advocate for single-payer national health insurance. PNHP had no role in funding the study mentioned above. To speak with a physician/spokesperson in your area, visit www.pnhp.org/stateactions or call (312) 622-0996.

Financial Relief for Volkswagen Diesel Owners

You may be eligible for money damages if you owned or leased one of these VW, Porsche or Audi vehicles.

In the major scandal of 2015, Volkswagen cheated you and the world. They rigged diesel emission controls so you, nor regulators, would know how much pollution their cars were adding to our environment.

They were caught and have reserved $7.3 billion to help "make it right" with victims.

If you owned or leased one of these vehicles, contact us now.

 Beth Janicek, Board Certified Personal Injury Attorney Janicek Law attorneys are actively pursuing these cases against VW. Do Not Wait...

Janicek Law Firm, PC

Free Consultation

(Call toll free)

1-877-795-3425 or Email

Vehicles Involved

VW Jetta (2009–2015)

VW Jetta SportWagen (2009–2014)

VW Golf (2010-2015)

VW Golf SportWagen (2015)

VW Beetle (2012–2015)

VW Passat (2012-2015)

Audi A3 (2010-2015)

VW Touareg (2009–2016)

Porsche Cayenne (2015)

Audi A6, A7, A8, Q5 Quattro (2016)

 

Search for more about this topic on SeniorJournal.com

Google Web SeniorJournal.com

Keep up with the latest news for senior citizens, baby boomers

Click to More Senior News on the Front Page

Copyright: SeniorJournal.com

    

 

Published by New Tech Media - www.NewTechMedia.com

Other New Tech Media sites include CaroleSutherland.com, BethJanicek.com, SASeniors.com, DrugDanger.com, etc.