Following up on our earlier discussion of the administrative costs of Medicare and private insurers, Robert Book sent me a report on Illusions of Cost Control in Public Health Care Plans, which is full of numbers and argues that “Medicare’s administrative costs are a lower percentage of the total not because Medicare has cheaper administration, but because it has more expensive patients.” I don’t know enough to evaluate these arguments, but I like that he has a lot of numbers and graphs right out there, so that any disputes can be on specific points.
I do have one question, which probably reflects my ignorance of heath-economics terminology more than anything else. Book writes, “Claims processing is the only category that is at all sensitive to the level of health care utilization.” From my personal experience with the health care system, I associate “administrative costs” with the many levels of clerks and paper-pushers you have to deal with before you get to see a doctor or nurse. I’m not quite sure how “claims processing” is defined, but I see a lot of full-time employees (as well as, I assume, some higher-paid full-time employees in some back room) who aren’t doing anything health-related; they’re just minding the store. And this all seems pretty much proportional to health care utilization: I assume that if people are going to the doctor twice as often, or doing more complicated procedures, there are that many extra visits, that many extra forms to fill out, etc. I’ve been in hospital wards at night where there is no doctor to be seen, maybe no nurse, but three or four administrative employees appear to be continously busy with something or another.
This is not intended as a criticism of Book’s argument, just a thought some of these seemingly neutral terms such as “administrative costs” can be confusing.