By NextBestFitPublic administration with a cost target
One public administrator with a published admin-cost target (e.g., under 3%).
Follows from single payer; publish an admin-cost target.
Review ledgerHow this path connects
This path
Public administration with a cost target
Requires:
Single public payer for everyoneTens of millions of people have no coverageChosenConcrete changes if chosen
What would actually have to change in law, agencies, payment rules, or systems.
- Create a public administering agency with a published admin-cost target
- Fund customer service and integrity staff
Effects
Each effect has its own page: the evidence, the case that it is or isn't a real cost, and whom it affects.
What it fixes
- Insurer overhead and profit
A public administrator minimizes overhead and reduces provider-side administration through a shared set of rules. Publishing an administrative-cost target makes performance auditable.
- About $1 trillion a year in administrative cost
A public administrator reduces provider-side administrative work through a shared set of rules.
What it creates or worsens
- One payer becomes one target
A public administrator takes over administration while public agencies may underinvest in fraud control.
- Chronic underfunding by government budgets
Public agencies may underinvest in customer service and fraud control.
- Transition disruption: jobs, companies, and familiar coverage
Moving to a public administrator ends a large number of insurer jobs.
7 paths soften this
Phased transition in wavesTransition disruption: jobs, companies, and familiar coverageChosenFast transition in one or two yearsTransition disruption: jobs, companies, and familiar coverageRejectedState pilots firstTransition disruption: jobs, companies, and familiar coverageRejectedRegulated multi-payer: everyone must have a non-profit or tightly regulated planTens of millions of people have no coverageRejectedPublic option alongside private insuranceTens of millions of people have no coverageRejectedLower the Medicare age step by step (and enroll children at birth)Tens of millions of people have no coverageRejectedPrivate supplemental plans for extrasLosing the choice of health plan and insurer competitionChosen
Who's affected
Who gains
- People with employer coverage
- Insurer overhead and profit: Premiums pay for insurer overhead and profit.
- About $1 trillion a year in administrative cost: Premiums pay for the administration.
- Doctors, nurses, and other clinicians
- About $1 trillion a year in administrative cost: Time goes to billing and insurer rules instead of patients.
- Taxpayers and public budgets
- About $1 trillion a year in administrative cost: Public programs pay for it too.
- Chronic underfunding by government budgets: Restrained health funding limits public spending in the short run.
- Fraudulent operators and cybercriminals
- One payer becomes one target: Concentrated national payments provide a single fraud target.
Who loses
- Health insurers, brokers, and their shareholders
- Insurer overhead and profit: Overhead and profit are insurers' income.
- About $1 trillion a year in administrative cost: Insurers, billing firms, and clearinghouses earn from the complexity.
- Transition disruption: jobs, companies, and familiar coverage: Insurers lose their core business, and shareholders lose value.
- Insurance and billing workers
- About $1 trillion a year in administrative cost: Their jobs exist because of the complexity.
- Transition disruption: jobs, companies, and familiar coverage: Jobs selling coverage and processing claims end.
- Taxpayers and public budgets
- One payer becomes one target: A single national payer concentrates fraud and cyber risk.
- People relying on publicly funded care
- Chronic underfunding by government budgets: Slow public funding growth leads to longer waits.
- Doctors, nurses, and other clinicians
- Chronic underfunding by government budgets: Public budget competition constrains funding for their work.
- People with employer coverage
- Transition disruption: jobs, companies, and familiar coverage: People leave plans most of them rate well, and must re-learn how coverage works.
Other ways to soften the losses
- Worker transition program
Where it has been tried
- Traditional Medicare: Administrative costs are about 1.4% of spending per the Trustees, excluding provider-side costs and work done by Social Security and the IRS.
- United States: In 2023, federal administrative expenses were 1.4% of Medicare hospital-insurance costs and 0.9% of supplementary medical-insurance costs.