Comparing Aetna and Medicare: $30 vs. $4 a claim

Steven Brill has a remarkable article in Time on health care. Perhaps the paragraph that stood out the most to me was this one:

[T]he only players in the private sector who seem to operate efficiently are the private contractors working — dare I say it? — under the government’s supervision. They’re the Medicare claims processors . . . . Medicare’s total management, administrative and processing expenses are about $3.8 billion for processing more than a billion claims a year worth $550 billion. That’s an overall administrative and management cost of about two-thirds of 1% of the amount of the claims, or less than $3.80 per claim.

According to its latest SEC filing, Aetna spent $6.9 billion on operating expenses (including claims processing, accounting, sales and executive management) in 2012. That’s about $30 for each of the 229 million claims Aetna processed, and it amounts to about 29% of the $23.7 billion Aetna pays out in claims.

I’ll soon be publishing an article looking at public-private partnerships in Medicare and Medicaid. I, too, was impressed by many contractors, however much remains to be done to optimize their performance. The other lesson: the harder one looks at the supposedly “public” or “private” parts of our health care system, the more one realizes how imbricated they are. The categories simply cease to be meaningful in the context of US health care (and increasingly outdated in our finance, telecom, and other industries, as well).

You may also like...