December 04, 2007

In the U.S. health care debate there are two big "villians" for left-leaning critics: the drug companies and the insurance companies.

For instance, Democratic Senator Hillary Clinton recently claimed that "insurance companies spend $50 billion a year figuring out ways to avoid paying claims." That's a pretty hefty number; but where is she getting her figure from?

Merrill Matthews, writing in the Wall Street Journal can't figure it out:

Currently, the private sector health insurance industry spends about $600 billion a year paying traditional health care claims for those under age 65. According to a major actuarial firm, the industry spends roughly $30 billion a year adjudicating those claims -- not "denying" them, but evaluating and processing them. There doesn't seem to be a solid number for the amount of claims actually denied, but several health actuaries estimate that amount to be around $3 billion.

Read the whole thing. It doesn't add up. I'm still waiting for the Washington Post and the New York Times to accuse her of using false statistics - an accusation both papers have leveled against Mayor Giuliani in his use of prostate cancer survival statistics in the U.S. and U.K.

For a blow by blow decsription of administrative costs in federal and private insurance programs, see this excellent report by my colleague Ben Zycher: Comparing Public and Private Health Insurance.

Posted by Paul Howard at December 4, 2007 03:56 PM

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