Comparing Public and Private Health Insurance

The public debate over prospective reform of the U.S. health-care system has centered on several distinct issues, among them the implications of various reform proposals for costs, both in the aggregate and in terms of the relative burdens to be borne by such specific groups as patients, providers, and taxpayers. At the aggregate level, there remains an important debate over the extent to which given reforms can be predicted to yield efficiencies of one kind or another; in particular, some proponents
of a “single-payer” health-care system, an example of which is Medicare in the U.S., argue that substantial cost efficiencies of various kinds would be realized through adoption of a single-payer system for the U.S.

“Administrative” costs are one particular example that has emerged as central in the public debate; some proponents of a single-payer health-care system for the U.S. argue that the administrative cost savings attendant upon such a policy change would be substantial, indeed, sufficiently large to finance health-care insurance coverage for all of the uninsured in the U.S. This study seeks to examine that general assertion, and so has as its central purpose a comparison of such administrative costs for Medicare and for private health insurance in the U.S., using definitions and the available data so as to allow for a full accounting for both systems.