Dive Brief:
- A new study published by Health Affairs concludes that the administrative costs for health insurance can be expected to increase by more than a quarter of a trillion dollars over the next 10 years.
- An estimated $270 billion in new costs will be incurred by both private and government programs, an amount "over and above what would have been expected had the law not been enacted," co-author David Himmelstein writes.
- With 22.5% of all new spending expected to go toward overheard, that amounts to nearly one out of every four dollars going to bureaucracy, co-author Steffie Woolhandler notes.
Dive Insight:
The bulk of the new overhead costs will come from increased enrollment in private plans, the authors speculate, as well as the expansion of government programs such as Medicaid and the operation of both state and federal health exchanges.
The authors suggest private insurers have increased their administrative costs despite some regulations aimed at controling those expenses—including the medical loss ratio, which requires that a certain portion of premiums go directly to fund healthcare.
The study data comes from the National Health Expenditure Projections and the Congressional Budget Office. It is worth noting that the authors are advocates for a single-payer system and are members of Physicians for a National Health Program.
Want to read more? You may enjoy this story about the sweeping new Medicaid maanaged care rule.