What if a private insurance company raised its administrative costs by 1% , but was able to reduce fraudulent claims by 10% and reduce the premium charged to customers by 8%. This is an example of how an increase in the administrative cost ratio can add value.
http://healthcare-economist.com/2006/07/27/medicares-true-administrative-costs/
Medical Loss Ratio (MLR) A basic financial measurement used in the Affordable Care Act to encourage health plans to provide value to enrollees. If an insurer uses 80 cents out of every premium dollar to pay its customers' medical claims and activities that improve the quality of care, the company has a medical loss ratio of 80%.
https://www.healthcare.gov/glossary/medical-loss-ratio-MLR/
A medical loss ratio of 80% indicates that the insurer is using the remaining 20 cents of each premium dollar to pay overhead expenses, such as marketing, profits, salaries, administrative costs, and agent commissions.
https://www.healthcare.gov/glossary/medical-loss-ratio-MLR/
It is a flawed argument to assert that Medicare is more efficient because they have a lower percentage of total cost that goes to administrative costs. That percentage is the result of a numerator (admin cost) divided into a denominator (total revenue).
http://healthaffairs.org/blog/2011/09/20/medicare-is-more-efficient-than-private-insurance/
1 Defenders of the insurance industry estimate administrative costs as 17 percent of revenue.  Insurance industry-funded studies exclude private plans’ marketing costs and profits from their calculation of administrative costs. Even so, Medicare’s overhead is dramatically lower.
http://healthaffairs.org/blog/2011/09/20/medicare-is-more-efficient-than-private-insurance/
Contrary to claims made by John Goodman and Thomas Saving in an earlier Health Affairs Blog post, non-partisan data from the Congressional Budget Office (CBO) and the Center for Medicare and Medicaid Services (CMS) demonstrate definitively that private insurance is increasingly less efficient than Medicare.
http://healthaffairs.org/blog/2011/09/20/medicare-is-more-efficient-than-private-insurance/
Written By: Jason Shafrin - Jul• 27•06. A common justification for Medicare is that the public health insurance system has an overhead cost which is about 2% of claims, while the private sector has administrative costs between 20%-25% of claims. This tells us that Medicare is the best system for America…right?
http://healthcare-economist.com/2006/07/27/medicares-true-administrative-costs/
According to a calculation by the National Academy for Social Insurance, if spending on Medicare rose at the same rate as private insurance premiums during that period, Medicare would have cost an additional $114 billion (or 31.7 percent).
http://healthaffairs.org/blog/2011/09/20/medicare-is-more-efficient-than-private-insurance/
Medicare Is More Efficient Than Private Insurance. Editor’s note: Robert B. Wohl, B.A., Wesleyan 2011, assisted Diane Archer in the preparation of this response to an earlier Health Affairs Blog “Contributing Voices” post by John Goodman and Thomas Saving.
http://healthaffairs.org/blog/2011/09/20/medicare-is-more-efficient-than-private-insurance/
Medicare’s (true) Administrative Costs. A common justification for Medicare is that the public health insurance system has an overhead cost which is about 2% of claims, while the private sector has administrative costs between 20%-25% of claims.
http://healthcare-economist.com/2006/07/27/medicares-true-administrative-costs/
what is medicare's overhead?
Medicare's overhead is the public health insurance system has an overhead cost which is about 2% of claims, while the private sector has administrative costs between 20%-25% of claims.  Medicare's overhead is the public health insurance system has an overhead cost which is about 2% of claims, while the private sector has administrative costs between 20% to 25% of claims.