O.Care to add Billions in Insurance Overhead Costs

Obamacare will cost insurers more than a quarter of a trillion dollars in additional administrative costs by 2022, a new study released Wednesday says.

The findings published in Health Affairs magazine call for a universal single-payer system because it would reduce, rather than add, to administrative costs.

The report says that over the eight years through 2022, the Affordable Care Act will tack on $273.6 billion in overhead. Some of that will be added to Medicare and Medicaid programs, but the bulk of it — $172.2 billion — will be borne by private insurance. That total increase, in both government and private insurance programs, amounts to $1,375 for each newly insured person a year, or roughly 22.5% of total government expenditures.

“Insuring 25 million additional Americans, as the [Congressional Budget Office] projects the ACA will do, is surely worthwhile. But the administrative cost of doing so seems awfully steep, particularly when much cheaper alternatives are available,” the report says.

It goes on to say: “Traditional Medicare runs for 2% overhead, somewhat higher than insurance overhead in universal single-payer systems like Taiwan’s or Canada’s. Yet traditional Medicare is a bargain compared to the ACA strategy of filtering most of the new dollars through private insurers and private HMOs that subcontract for much of the new Medicaid coverage.”

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