Many people say this, but it's simply not true. The numbers miss crucial information, and I'll explain why. The reason that I've got this knowledge that isn't w

Many people say this, but it's simply not true. The numbers miss crucial information, and I'll explain why. The reason that I've got this knowledge that isn't widely known is that my wife works for a hospital, where she is the "Manager of Budget and Reimbursement". That means that half of her job (and that of her department) is to secure reimbursement from Medicare (and Medicaid). If you're sharp, you'll already see where this is headed. The problem is that Medicare, while not quite a monopsony, is so large that they can call the shots pretty much as they like. Where other healthcare insurance providers (say, Aetna) still exist, Medicare's market share -- and thus power in the market -- is many times larger than the biggest of them. That being the case, Medicare can largely dictate unilaterally the terms under which it's willing to pay out. And that is the very raison d'etre for my wife's department. So while other providers show greater expenses for administrative costs, Medicare's own expenses for the equivalent is far lower. But that doesn't mean that, in the larger picture of the patient's care, these expenses are not being incurred. Medicare's size and market power allows them to demand that providers (e.g., my wife's hospital) offload a huge amount of the administrative costs, doing much of what ought to be Medicare's own work (by comparison with what's done by and for other carriers) for them. This means that while Medicare isn't paying directly for it, the administrative expenses are still incurred in the course of patient care; it's just that the costs are hidden from Medicare books, and must be amortized across the rest of the hospital accounting. This means that half of the expenses the hospital pays for my wife and her department are really Medicare expenses, but don't show up on Medicare books -- instead, they're amortized as a fixed expense across the whole hospital.