The belief that Medicare is a more efficient system than employee-sponsored health insurance comes under fire in a study that claims there are hidden costs in the government program. "One of the most common, and least challenged, assertions

in the debate over U.S. health care policy is that Medicare administrative costs are about 2 percent of claims costs, while private insurance companies' administrative costs are in the 20 to 25 percent range," says "Medicare's Hidden Administrative Costs: A Comparison of Medicare and the Private Sector," funded by the Council for Affordable Health Insurance, an advocacy group for many of the insurance companies often held up in comparison. But the statement does not really hold up under scrutiny, asserts the study's author, Merrill Matthews, PhD.

Medicare describes administrative costs as a ratio of processing costs divided by claims. In 2003, says the study, the average medical cost for a Medicare beneficiary per year was $6,600. The average medical cost for someone with employer-sponsored health insurance was $2,700. "Because of the higher cost per beneficiary," writes Matthews, Medicare's method of calculation makes administrative costs, albeit unintentionally, appear to be lower than they really are."

Matthews — a prolific economist whose credits include visiting scholar for the conservative Institute for Policy Innovation — also points out that there are more costs associated with Medicare than simply paying claims. "Just imagine all of the congressional and administrative staff time and effort devoted to creating, debating, promoting, opposing, and ultimately passing the Medicare Modernization Act of 2003," the study states. "[N]ot one dime of the money and time spent on that . . . debate appear[s] in Medicare's administrative costs."

The salaries of officials at the Centers for Medicare & Medicaid Services, who are essentially the management team that runs Medicare, are not included.

Matthews also takes on the complaint about the private sector having to pay the cost of advertising and marketing its products. "You may have noticed that CMS has been heavily involved lately in promoting the new Medicare drug benefit," the study says. "Nothing wrong with that, but those are marketing costs, which are ignored in Medicare's administrative numbers."

Private insurers, the study notes, are careful when it comes to paying claims. While that may add to administrative costs, it lowers claims costs. "The government, by contrast, is a claims-paying machine," the study states. "When abuse becomes egregious, the fraud unit steps in — and that effort won't be included in administrative costs."

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There’s a lot more going on in health care than mergers (Aetna-Humana, Anthem-Cigna) creating huge players. Hundreds of insurers operate in 50 different states. Self-insured employers, ACA public exchanges, Medicare Advantage, and Medicaid managed care plans crowd an increasingly complex market.

Major health care players are determined to make health information exchanges (HIEs) work. The push toward value-based payment alone almost guarantees that HIEs will be tweaked, poked, prodded, and overhauled until they deliver on their promise. The goal: straight talk from and among tech systems.

They bring a different mindset. They’re willing to work in teams and focus on the sort of evidence-based medicine that can guide health care’s transformation into a system based on value. One question: How well will this new generation of data-driven MDs deal with patients?

The surge of new MS treatments have been for the relapsing-remitting form of the disease. There’s hope for sufferers of a different form of MS. By homing in on CD20-positive B cells, ocrelizumab is able to knock them out and other aberrant B cells circulating in the bloodstream.

A flood of tests have insurers ramping up prior authorization and utilization review. Information overload is a problem. As doctors struggle to keep up, health plans need to get ahead of the development of the technology in order to successfully manage genetic testing appropriately.

Having the data is one thing. Knowing how to use it is another. Applying its computational power to the data, a company called RowdMap puts providers into high-, medium-, and low-value buckets compared with peers in their markets, using specific benchmarks to show why outliers differ from the norm.
Competition among manufacturers, industry consolidation, and capitalization on me-too drugs are cranking up generic and branded drug prices. This increase has compelled PBMs, health plan sponsors, and retail pharmacies to find novel ways to turn a profit, often at the expense of the consumer.
The development of recombinant DNA and other technologies has added a new dimension to care. These medications have revolutionized the treatment of rheumatoid arthritis and many of the other 80 or so autoimmune diseases. But they can be budget busters and have a tricky side effect profile.

Shelley Slade
Vogel, Slade & Goldstein

Hub programs have emerged as a profitable new line of business in the sales and distribution side of the pharmaceutical industry that has got more than its fair share of wheeling and dealing. But they spell trouble if they spark collusion, threaten patients, or waste federal dollars.

More companies are self-insuring—and it’s not just large employers that are striking out on their own. The percentage of employers who fully self-insure increased by 44% in 1999 to 63% in 2015. Self-insurance may give employers more control over benefit packages, and stop-loss protects them against uncapped liability.