Veronique de Rugy has found a couple of interesting analyses. I particularly agree with this take by Alex Tabbarok:
I find the debate peculiar for a number of reasons:
1) Picking out one measure of health care “costs” to compare systems is sadly reminiscent of the arguments for socialism. Do you remember those arguments? Under socialism:
* “Think of how much money we will save on advertising!”
* “Socialism will lower costs by maximizing economies of scale!”
* “Money will be used for production not profits!”Exactly these arguments are regularly trotted out in the debate over administrative costs in health care so color me unimpressed. To be clear, the point is not that these statements are false – the point is that these premises to the argument are all in some sense true it’s just the conclusion, socialism is more efficient than capitalism, which turned out to be false. We tried that and it didn’t work. In other words, you have to compare systems not arbitrarily pick out for comparison one type of costs.”
They never learn.
Without the competition in a free market system there is a tendency for stagnation, lack of creativity, inefficiency. There are ways even a socialist state can introduce competition however: thinking back of Korolev, Chelomei and Yangel during the Space Race reminds me of that.
And once again we see the observation that blindly writing checks doesn’t take a lot of administrative overhead. Good thing administrative overhead is the only cost worth considering. Not the overall efficiency of the system or whether that money is actually getting used in the manner in which it is intended.
I’ve read reports that about 10% of Medicare spending (about $30 billion a year) goes to fraud. If they’re spending less on administration, this likely explains the amount of fraud. The fact that a good percentage of the costs that go to covering Medicare overhead are paid in other parts of the budget explains a lot. Corruption explain the rest.