ObamaCare Blamed for up to 47% Hike in Insurance Rates

Discussion in 'Politics' started by madanthonywayne, Oct 16, 2010.

  1. joepistole Deacon Blues Valued Senior Member

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    Last edited: Oct 18, 2010
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  3. madanthonywayne Morning in America Registered Senior Member

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    Profitable? Those running dog, capitalist bastards!
     
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  5. ElectricFetus Sanity going, going, gone Valued Senior Member

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    Yes profiting off the suffering of people, that is wrong, has nothing to do with capitalism or socialism in general. For the healthcare industry its self a system must be in placed where the care for the sick it optimal, where those that are ill get treatment and where disease can be prevented, now you might not believe that people should be given such a right and that when they are ill and can't pay for treatment they should die, but our present system is even worse then that, people are encouraged to have health insurance, to pay into it, and when they need it the health insurance industry is motivated by profit to drop them under some excuse and leave them to die.

    US Regulations at present are inadequate such that profit is not being made by optimizing the care and treatment of people, but by degenerating the care and treatment of people, now I think that is wrong that that is a scam abhorrent, regardless if the present system is the capitalist ideal. Now to allow for captialism and yet to make sure people get the care they need, requires that laws and regulations be place on insurance companies so they will profit best by providing the best care for its people, but your against that I'm guessing, that would be to socialist for your taste?
     
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  7. adoucette Caca Occurs Valued Senior Member

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    You need some SUPPORT for that claim.

    Consider (From Wiki)

    In 2007, the U.S. spent $2.26 trillion on health care, or $7,439 per person, up from $2.1 trillion, or $7,026 per capita, the previous year.

    So the costs went up $160 Billion in one year.

    BUT

    Of each dollar spent on health care in the United States 31% goes to hospital care, 21% goes to physician services, 10% to pharmaceuticals, 8% to nursing homes, 7% to administrative costs, and 23% to all other categories (diagnostic laboratory services, pharmacies, medical device manufacturers, etc.

    http://en.wikipedia.org/wiki/Health_care_in_the_United_States

    7% Admin costs, which includes not only Insurance but all the non insurance admin costs associated with doctors offices and hospitals, only comes to $158 Billion.

    So, CLEARLY, that increase is NOT because of a jump in Admin expenses.

    Indeed, if one looks at insurance company Profits.

    http://www.ama-assn.org/amednews/2009/02/23/bisa0223.htm

    The 7 largest Insurance companies made ~$12 Billion in profits in 07, and only about $8 Billion in 08.

    $12 Billion is roughly 1/2 of a percent of our medical expenses.

    Of course, there are lots more costs to run an insurance program then just profits, but it does help to put the cost of Admin in perspective.

    And I'm not saying it isn't a lot of money. Indeed if we went to a non-insurance based system we could probably easily save over $100 billion or ~5% of medical costs, (and of course we would then need to find jobs for the 430,000 people now employed by the Insurance companies), so it IS a lot of money, but it's annual growth pales in comparison to the growing cost of providing medical care to a country that likes to drive fast, shoot first, eat till they are obese, get their excercise vicariously and then desperately hang on long past the time there is any quality of life.

    Handy to look in the mirror every now and again and see where the real problems lie.

    Though blaming insurance companies is so much more appealing.

    Arthur
     
  8. adoucette Caca Occurs Valued Senior Member

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    7,829
    Personally I think everyone knows our system is broke.
    It's just no one can figure out a path to fix it.

    So I see people arguing not that it doesn't need fixing, but about the way to go about fixing it.

    Personally, I'd select the top 3 systems in use in other large democratic Countries based on objective measures of quality of care, universal coverage and cost per person, and then adopt the one that Congress thinks is better, and then come up with a workable plan to transition from our current system to the new one.

    Of course that will never happen.

    Arthur
     
    Last edited: Oct 18, 2010
  9. ElectricFetus Sanity going, going, gone Valued Senior Member

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    18,523
    Exactly the problem, when a medical system like many other first world countries, mind you just about all of them have better systems in the indicators you listed above, the republicans screamed socialism, conservative democrats got cold feet and we could not even get a well regulated capitalist insurance like japan's, let alone a socialist hybrid system like France or even more socialized systems like Britain and Canada. No after all the compromising what we ended up with is likely crap, although we will have toe wait several years for it to take effect and the republicans are likely to even prevent that from happen.
     
  10. joepistole Deacon Blues Valued Senior Member

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    22,910
    Well it is kind of silly to blame Obamacare for increases in healthcare insurance expenses when each year the industry is spending less on actual heatlhcare expenses and pocketing more of each premium dollar.

    It kinda shoots a hole in your OP, doesn't it?
     
  11. Tiassa Let us not launch the boat ... Valued Senior Member

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    37,882
    Profits are up! That means it's time to increase rates!

    Rick Ungar explains:

    According to a report prepared by Health Care for America Now – based on annual reports filed with the Security and Exchange Commission – WellPoint Inc., UnitedHealth Group, Cigna Corp., Aetna Inc. and Humana Inc. posted combined profits of $12.2 billion, a 56% increase over calendar year 2008.

    During the same period of time, the big five insurers covered 2.7 million fewer Americans.

    Naturally, this will make a great many people angry.

    Take a breath and set aside the indignation, politics and ideology for a moment so you can see this for what it actually is – the last, dying gasp of a business model that no longer works.

    If I understand the basis of support for maintaining the private health insurance system, it’s all about protecting the free enterprise system. In America, we believe that the private markets are more efficient at bringing goods and services to the public than government can ever hope to be. Give the consumers the power to force pricing decisions by leaving them with control over their dollars, and the system will work correctly.

    Yet, the free enterprise system is also supposed to be about selling more to earn more—not reducing customers in need in order to improve profits. I think most would agree that this is a particularly problematic practice when the commodity at issue is health care.

    Ungar also considers the lobbyists' talking point that only a penny of each dollar spent on health care goes toward profits:

    While Mr. Zirkelbach is correct when he points out that the typical profit margin earned by health insurance companies is lower than most industries, (it is a bit more than the one penny per dollar he suggests) his comment only serves to highlight how the interests of the for-profit insurance companies are completely out of whack with the needs of the American public.

    And nowhere is the point being made more clearly than in California where Wellpoint’s Anthem Blue Cross division has informed its individual policy holders to expect premium increases of up to 39%.

    Not surprisingly, Wellpoint is getting a lot of heat over the price increases, particularly in view of the company having posted net income in 2009 of $4.4 billion.

    In explaining why they found it necessary to dramatically increase these rates, Wellpoint executive Brian Sassi said that they lost a number of healthy customers due to the economic downturn and that the loss of these customers has left “an insured pool that utilizes significantly more services per individual than under better economic times.”

    Translation – if we don’t have healthy customers to pay for the sick ones, we have to get rid of the sick people.

    How do you do that? Raise prices so high the sick cannot afford to stay insured.

    There is no arguing this point. When the insurance pool model falls out of balance, the insurance company either has to find a way to get more customers into the pool or balance it out by getting rid of the sick people who spend most of the money. Since the current business model does not survive if the health insurers lower their premium costs to attract more customers, all they have left is the choice of getting rid of the sick to protect their profits.

    What he is describing is what others call a "death spiral". After Wellpoint announced its intended policy increase, Paul Krugman explained:

    Here’s the story: About 800,000 people in California who buy insurance on the individual market — as opposed to getting it through their employers — are covered by Anthem Blue Cross, a WellPoint subsidiary. These are the people who were recently told to expect dramatic rate increases, in some cases as high as 39 percent.

    Why the huge increase? It’s not profiteering, says WellPoint, which claims instead (without using the term) that it’s facing a classic insurance death spiral.

    Bear in mind that private health insurance only works if insurers can sell policies to both sick and healthy customers. If too many healthy people decide that they’d rather take their chances and remain uninsured, the risk pool deteriorates, forcing insurers to raise premiums. This, in turn, leads more healthy people to drop coverage, worsening the risk pool even further, and so on.

    Now, what WellPoint claims is that it has been forced to raise premiums because of “challenging economic times”: cash-strapped Californians have been dropping their policies or shifting into less-comprehensive plans. Those retaining coverage tend to be people with high current medical expenses. And the result, says the company, is a drastically worsening risk pool: in effect, a death spiral.

    The health care market is collapsing because its focus is on issues other than providing the service it asserts to provide. If your car turns out to be a lemon, or your computer comes with damaged hardware, you can demand the manufacturer fix the problem. With health insurance, though, it's not simply a matter of inconvenience. You cannot recall the dead.

    The basic idea of a capitalistic marketplace is that in providing a commodity, one earns profit. We've turned this idea on its head, though, making the commodity secondary to the profit. That this is a predictable outcome is beside the point. Until the health care companies and their investors recognize that their profit is a symptom of commodity provision, instead of provision being an unfortunate symptom of profit, we will continue along this merry traipse into the abyss.

    Excusing their blindness is foolish. Blindly following them over the edge is catastrophic. Their own business models were unprepared for stormy weather.

    If you provision a ship with nothing but augers, then do not be surprised if someone gets the idea to drill holes in the hull to let the storm water out. And perhaps it was their only tool, and maybe it seemed the logical course of action given the circumstances, and that just might give the unfortunate sailors some comfort as they sink into oblivion. But you have to wonder about who decided on the augers.
    ____________________

    Notes:

    Ungar, Rick. "As Congress sleeps health insurance profits skyrocket –coverage plummets". True/Slant. February 12, 2010. TrueSlant.com. October 18, 2010. http://trueslant.com/rickungar/2010...surance-profits-skyrocket-–coverage-plummets/

    Krugman, Paul. "California Death Spiral". The New York Times. February 19, 2010; page A27. NYTimes.com. October 18, 2010. http://www.nytimes.com/2010/02/19/opinion/19krugman.html

    See Also:

    Health Care for America Now. (n.d.) HealthCareForAmericaNow.org. October 18, 2010. http:/healthcareforamericanow.org/

    Seelye, Katharine Q. "Administration Rejects Health Insurer’s Defense of Huge Rate Increases". The New York Times. February 12, 2010; page A21. NYTimes.com. October 18, 2010. http://www.nytimes.com/2010/02/12/health/policy/12insure.html
     
  12. adoucette Caca Occurs Valued Senior Member

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    The 7 largest Insurance companies made ~$12 Billion in profits in 07, and only about $8 Billion in 08, so the fact that you post that they went back up to ~12 Billion in 09, is no biggy, they were really just recovering from a bad year in 08.

    BUT

    The important point is that ~$12 Billion is just 1/2 a percent of our Health Care costs.

    We have a problem with the expense of our system, and yes the Insurance industry accounts for probably 4 or 5% of that, but that percent has been reasonably the same for some time, so it's not the driving reason behind why our health care costs are going up each year.

    Arthur
     
  13. adoucette Caca Occurs Valued Senior Member

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    7,829
    Except as I pointed out, the 08 profits were DOWN about 50%, so this increase is just a recovery from a bad year.

    And yes, I do expect insurance costs to go up as number of insured go down. Which might sound counter-intuitive, but the insurance industry knows that those who have lost their jobs will still get medical care, but won't pay for it and so those unreimbursed costs will be passed on via increases in hospital and doctors charges. Thus those who still have insurance will pay more. (this is the exact same logic that the new plan relys on to drop the cost of insurance, by increasing the number of people who are insured)

    Again, blaiming the Insurance companies, when $12 billion represents ONE HALF PERCENT of our Medical costs is frankly silly.

    Sure, if we did away with an insurance based system we could save a lot of money.

    As I pointed out before, In 2007, the U.S. spent $2.26 trillion on health care, or $7,439 per person, up from $2.1 trillion, or $7,026 per capita, the previous year.

    Or a one year increase in Medical costs of $150 Billion dollars,

    But

    Our Administration costs are pegged at 7% or our cost, or just $158 Billion per year, so CLEARLY the hugh annual increase in our medical costs had almost NOTHING to do with the $4 or so billion annual flux in insurance company profits.

    But the new plan doesn't do away with our bloated insurance infrastructure (~430,000 people in the industry) and so while it might get rid of some of the costs via programs like doing away with pre-existing conditions, the bulk of the industry looks like it will be sticking around, and so will their annual costs.

    Arthur
     
  14. iceaura Valued Senior Member

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    30,994
    No one has ever claimed that the standard estimate 40% of our medical costs that cover the extra overhead, the total overhead costs to our economy of maintaining a host of private insurance companies in good financial health, is visible on the "administrative expense" or "profit" line of those corporations' financial statements.

    Paul Wellstone. Anthony Weiner. The various countries of First World Europe.

    The only serious problem with any of the several "paths toward" is the removal of insurance companies from their central role in fixing US health care cost and availability. That has proven difficult, but mostly it would seem because it cannot be stated as the problem - if that difficulty were ever simply and publicly recognized as the central problem, discussed in those terms in the public arena, much of the difficulty in handling it might evaporate.

    Worth a try, anyway.
     
    Last edited: Oct 18, 2010
  15. adoucette Caca Occurs Valued Senior Member

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    7,829
    ROTFLMAO.

    (post deleted, not worth getting banned over BS like that)

    Arthur
     
  16. adoucette Caca Occurs Valued Senior Member

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    7,829
    Nor have you shown that 40% is the "standard estimate" of the portion of our health care costs sucked up by Insurance Companies.

    Wiki claims 7% goes to Admin costs, or ~ $160 Billion, which includes far more than just the cost of insurance company overhead.

    To put that $160 billion in perspective, the insurance companies employ ~430,000 people which at an annual average salary of $60,000 would be ~$26 Billion, add buildings, equipment, advertising, billing and $12 billion profit and that number is probably $80 Billion to maybe as much as $100 Billion)

    On the other hand, our health care costs went up $150 Billion in just one year from 06 to 07 so CLEARLY, this annual rise in medical costs is not driven by the rising cost of insurance overhead.

    http://en.wikipedia.org/wiki/Health_care_in_the_United_States

    Arthur
     
  17. joepistole Deacon Blues Valued Senior Member

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    22,910
    You are quite correct, all of those countries that have cheaper better quality heatlhcare also have a single payer system where the government pays the bills and negotiates prices with private sector healthcare providers.

    But I have to wonder, given the widespread corruption of our government, if a single payer system would make it here in the US. Assuming one could get us to a single payer system in the US, could it remain independent of industry influence for long? Unfortunately, I think not long.

    If you look at virtually any of the federal or state governmental regulatory agencies, they are all run by industry insiders. So if and until we get our government corruption problems under control it is going to be a long hard slog to get our healthcare costs under control.

    This is why we so desperately need to move to a publicly financed system of campaigns and elections.
     
    Last edited: Oct 18, 2010
  18. iceaura Valued Senior Member

    Messages:
    30,994
    I made no such claim.

    My claim is that the standard estimate of the extra overhead costs incurred by the entire US health care system in supporting the US private medical insurance industry is about 40%. There are a variety of ways of coming to that estimate - perhaps the simplest is to compare the total costs of the US system with the total costs of delivery of comparable service in systems that resemble the US but without the private insurance company component. I invite you to do that - as it is common knowledge in my political circles, I simply take it as something everyone knows.

    Or, if you wish me to do the necessary ten minutes of Google searching, you could go first, and provide some kind of evidence or argument to back up your assertions - which were prior to mine, in this thread - that the extra overhead imposed by the market competition etc is negligible. You have been posting percentages directly paid as profit or formal administrative expense within those corporations, which would of course be almost irrelevant to such a claim.
     
  19. adoucette Caca Occurs Valued Senior Member

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    7,829
    Your first claim is too obtuse to be used.
    Yes we have a private insurance industry but that's not the only difference, and so to assign all the difference in cost to that one difference makes no sense. You are claiming that the insurance companies are sucking nearly 1 Trillion dollars out of our health care system, but have offered no numbers to support that.

    The fact of the matter is that about 50% of the cost of our Health Care expenses are NOT part of the private insurance system, which would indicate that if 40% of our costs were actually from Insurance, then the insurance companies would be paying almost NOTHING for the care they cover, which is clearly not true.

    The fact is that Government programs directly cover about 30% of the population (over 80 million) and total Public spending accounts for about half of the total U.S. health care costs.

    I did present data to support my case. (and your summary of my costs is wrong)

    I presented the Wiki data that suggested that the TOTAL ADMIN expenses of our Health Care system was about 7%, and than includes much more than just the insurance overhead.

    I suggested (see previous post) that the cost of the insurance system was maybe 4 to 5% of the total health care cost, or roughly $80 to $100 Billion.

    Arthur
     
  20. iceaura Valued Senior Member

    Messages:
    30,994
    If you assume that none of the costs of the public 50% are tacked on by the operations of the private sphere, that is.

    Since that assumption is false, dramatically so, the calculation would need redoing with more realistic assumptions.

    Meanwhile, the US taxpayer pays more in taxes for that 50% than the entire equivalent delivery of services to everyone costs in any First World system without such insurance setups.

    So the argument that private insurance companies are completely waste - that the insurance companies are not in fact delivering any care at all on the margin for the money they collect - has some evidence to back it.
    Well a proper argument would of course deal with such circumstances. If you assume a stupid and nonsensical argument then no doubt that's what you will have.

    It would still be a little less obviously silly than assuming the formal "administrative expense" line on an insurance company's budget represents anything like the overhead cost of maintaining that company in the black within the US health care system.

    Or bizarre naivety like this:
     
  21. adoucette Caca Occurs Valued Senior Member

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    7,829
    And so once again, you post nothing to support your assertions.

    Typical.

    Arthur
     
  22. Mystical Sadhu Registered Member

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    54
    Discipline, including temperance, is essential for equitable availability of talents and skills in furtherence of preserving life and furthering human evolution. The conundrum of buck-passing and the greater imperative of parasitic enconomic predation than for actually healing anyone are sucking gratuitiously upon humanity, ruining people's lives with pricing, and performing gratutiously expensive tasks that coule far more successfully be done through natural and more subtle medicines. The current state of affairs necessitates control of pricing in a manner that covers true costs, pays relevant wages, yet does not suck the life out of patients for profits.

    What the hell is the purpose of human life anyway -- disposable beings, collateral damage, fuel for obscene profitability?
     
    Last edited: Oct 19, 2010
  23. Tiassa Let us not launch the boat ... Valued Senior Member

    Messages:
    37,882
    One a minute ... born, that is

    That number, seven percent, comes from a consideration of all health care costs in the United States (Kaiser). What it does not speak to, however, is the private business model itself. By the seven percent outlook, we see the following allocation of the theoretical "health care dollar":

    • Hospital care .................. .31
    • Physician/clinical services .... .21
    • Prescription drugs ............. .10
    • Investment ..................... .07
    • Program administration ......... .07
    • Nursing home care .............. .06
    • Other professional services .... .06
    • Dental ......................... .04
    • Govt. public health activities . .03
    • Home health .................... .03
    • Other retail ................... .03

    That seven percent is out of the whole health care pie.

    In the question of health care premiums and the private market, however, it's a much different story.

    The McKinsey team estimated that about 85 percent of this excess administrative overhead can be attributed to the highly complex private health insurance system in the United States. Product design, underwriting and marketing account for about two-thirds of that total. The remaining 15 percent was attributed to public payers that are not saddled with the high cost of product design, medical underwriting and marketing, and that therefore spend a far smaller fraction of their total spending on administration.

    Two studies using more detailed bilateral comparisons of two countries illustrate even more sharply the magnitude of our administrative burden relative to that in other developed countries.

    One of these is an earlier McKinsey study explaining the difference in 1990 health spending in West Germany and in the United States. The researchers found that in 1990 Americans received $390 per capita less in actual health care but spent $360 more per capita on administration.

    A second, more recent study of administrative costs in the American and Canadian health systems was published in 2003 by Steffie Woolhandler and David Himmelstein in The New England Journal of Medicine in 2003. The study used a measure of administrative costs that includes not only the insurer's costs, but also the costs borne by employers, health-care providers and governments – but not the value of the time patients spent claiming reimbursement. These authors estimated that in 1999, Americans spent $1,059 per capita on administration compared with only $307 in purchasing power parity dollars (PPP $) spent in Canada.


    (Reinhardt)

    The American Medical Association sees through this seven percent canard, as well. Its working explanation of the ACA:

    If an insurer spends less than its allocated 80 or 85 percent of premium dollars on patients, the ACA requires the insurer to rebate the enrollee for the amount in excess of the statutory percentage. For example, if a small insurer spent 83 percent of its premiums on patient care and 17 percent on administrative expenses, it would be required to rebate enrollees the 2 percent in excess of the 85 percent limit.

    If the administrative cost was pegged at seven percent, why would the law give them permission to double their administrative overhead?

    Also from the AMA:

    Given the wide variation in administrative cost estimates, government data provide a natural reference point. The annual National Health Expenditures (NHE) accounts report administrative expenditures of $143 billion in 2005. This amounts to 7.2 percent of total U.S. health care spending, broken out as 14.1 percent for private insurers and 5.2 percent for public programs .... NHE data also show more rapid growth of administrative expenditures for public programs than for private insurance in recent years.

    By comparison, industry estimates of administrative costs of private health plans generally are somewhat lower than NHE because they do not count insurer profits as part of administrative costs. Such inconsistencies in how administrative costs are defined make it difficult to determine the extent to which differences in estimates reflect differences in health plan efficiency.

    Unlike industry or NHE estimates, other measures inlcude a broader array of administrative costs not limited to those incurred by insureres, yielding estimates that are orders of magnitude higher. A study conducted by prominent single-payer advocates amassed data from the United States and Canada on the expenses of physicians, hospitals and employers for filing insurance claims, maintaining medical records, administering employee health benefits and so forth. The study found that administrative expenditures in the United States were four times higher than reported by NHE in 1999, or 31 percent of total health care spending, compared with only 17 percent in the predominantly government-run Canadian system. Similarly, within the United States, administrative expenses associated with private insurance were found to be much higher than those of medicare. The authors concluded that the bulk of these costs could be avoided if the United States were to adopt a Canadian-style health care system.

    Seven percent is a sucker's number.

    It's a sad asssertion of the health insurance industry: We failed to make the black ink we'd hoped for last year, so we're going to make it up this year. What we do, what targets we set, and how we hit or miss them is irrelevant; that profit margin has been calculated, damn it, and we're entitled to it by God's own decree!

    Many businesses, when faced with a disappointing year in which they profit fewer billions than they expected, adjust as they can, and maybe they get their margins back online. But no, the health insurance industry needs to go one further: they need the raw number. And it's everybody's fault but theirs that they didn't make it last year, so everyone but them is going to pay to make it right.

    So they only came out three billion ahead instead of four. By God, they're going to make sure that doesn't happen again.

    People aren't sympathetic.
    ____________________

    Notes:

    Henry J. Kaiser Foundation. "U.S. Health Care Costs". March, 2010. Kaiseredu.org. October 18, 2010. http://www.kaiseredu.org/Issue-Modules/US-Health-Care-Costs/Background-Brief.aspx

    Reinhardt, Uwe E. "Why Does U.S. Health Care Cost So Much? (Part II: Indefensible Administrative Costs)". Economix. November 21, 2008. Economix.Blogs.NYTimes.com. October 18, 2010. http://economix.blogs.nytimes.com/2...ch-part-ii-indefensible-administrative-costs/

    American Medical Association. "Health System Reform Insight - Sept. 23, 2010". September 23, 2010. AMA-Assn.org. October 18, 2010. http://www.ama-assn.org/ama/pub/hea...urces/insight/september-2010/23sept2010.shtml

    —————. "Administrative costs of health care coverage". (n.d.) AMA-Assn.org. October 18, 2010. http://www.ama-assn.org/ama1/pub/upload/mm/372/admincosts.pdf
     

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