Cost Versus Efficiency in Health Care

From economist Greg Mankiw’s blog:

Advocates of government-run health insurance like to point to Medicare’s low administrative costs (which, as I noted yesterday, is a controversial claim). But even if that factual claim were true, the argument would hardly be dispositive as to the greater efficiency of a publicly run system. As I put it in my recent Times article, “True, Medicare’s administrative costs are low, but it is easy to keep those costs contained when a system merely writes checks without expending the resources to control wasteful medical spending.”

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The bottom line: Low administrative costs are not to be confused with high administrative efficiency. In other words, administrators are not necessarily a deadweight loss to the system.

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July 7, 2009 | Filed Under Health Care | 1 Comment 

Comments

One Response to “Cost Versus Efficiency in Health Care”

  1. Craig on July 7th, 2009 6:39 pm

    Here is one example of costs not correlating to increased health: McAllen vs. El Paso Texas.

    http://news.bbc.co.uk/2/hi/americas/8137085.stm

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