In an op-ed for The Hill, Dr. Galles points to administrative costs as a percentage of overall costs, which is often cited as and indicator of Medicare’s efficiency. However, if Medicare became a private company, it would need to pick up many of the administrative costs that are currently absorbed by other government agencies such as the Internal Revenue Service and the Department of Health and Human Services.
Dr. Galles also argues that administrative costs make up such a low percentage of spending at Medicare because the older Medicare beneficiaries have higher patient costs than the average insurance enrollees. With these considerations in mind, Dr. Galles believes Medicare would actually be no more cost efficient than a private insurer if it were available to everyone.
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