Percentages can be deceiving. Remember that seniors make up 80% of health care costs, and if you are spending more on the actual care, the percentage of admin costs go down even if the admin costs themselves remain the same. Conversely, if you have someone who is healthy and requires no medical care, then no matter how small the admin cost is, it will still be at 100%.

Another way to decrease the admin cost percentage is by not being so vigilant in looking for fraud. You save money on administrative costs while increasing medical care spending (in the form of fraud) which does twice as much to lower that percentage number.

This is why you shouldn't be looking at the administrative cost per...

Percentages can be deceiving. Remember that seniors make up 80% of health care costs, and if you are spending more on the actual care, the percentage of admin costs go down even if the admin costs themselves remain the same. Conversely, if you have someone who is healthy and requires no medical care, then no matter how small the admin cost is, it will still be at 100%.

Another way to decrease the admin cost percentage is by not being so vigilant in looking for fraud. You save money on administrative costs while increasing medical care spending (in the form of fraud) which does twice as much to lower that percentage number.

This is why you shouldn't be looking at the administrative cost percentages, but at the actual administrative costs per individual covered.

If you have a healthy adult who needs no medical attention during the year, then no matter how efficient you are, 100% of the cost of keeping that person insured are administrative. On the other hand, if you have someone taking thousands of dollars worth of medication per month, then the administrative costs are going to be relative low percentage wise even if the administration isn't very efficient. I am willing to be that the insurance companies have to deal with a lot more of the former while medicare deals with a lot more of the latter.

And administrative costs aren't all bad either. The administrative cost of cutting down on fraud more than makes up for it's cost in money saved. But it...

If you have a healthy adult who needs no medical attention during the year, then no matter how efficient you are, 100% of the cost of keeping that person insured are administrative. On the other hand, if you have someone taking thousands of dollars worth of medication per month, then the administrative costs are going to be relative low percentage wise even if the administration isn't very efficient. I am willing to be that the insurance companies have to deal with a lot more of the former while medicare deals with a lot more of the latter.

And administrative costs aren't all bad either. The administrative cost of cutting down on fraud more than makes up for it's cost in money saved. But it will increase the percentage of administrative cost compared to health care expenses because it increases administrative cost while lowering (bogus) health care expenses. So by your standards, less fraud monitoring and more fraud is more efficient since it makes for a lower percentage on the administrative side.