Medicare's administrative costs higher than reported, association says

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Actual administrative costs for the Medicare program are much higher than generally reported, according to insurance industry research.

Medicare's administrative costs are actually 5.2%, not the 2% often cited by officials, according to a report by the Council for Affordable Health Insurance (CAHI), a research and advocacy association of insurance carriers. Conversely, administrative costs for private sector insurance are between 8.9% and 16.7%, not the nearly 25% often cited, according to the CAHI report.

The CAHI report says that "real apples-to-apples comparison of Medicare's true costs with those of the insurance industry" is difficult because "private sector insurers must track and divulge their administrative costs, while most of Medicare's administrative costs are hidden or completely ignored by the complex and bureaucratic reporting and tracking systems used by the government."

The full report, "Medicare's Hidden Administrative Costs: A Comparison of Medicare and the Private Sector," can be found at www.cahi.org.
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