Daily Archives: January 19, 2003

Cost to Provide Insurance

It has been written (I’ll post the link when I run across it again) that it costs government 2-4% for administration and costs private companies 12-14%. I wonder if this is because government processes are more efficient or simply because government insurance administrators just do less then private administrators? For instance, if the government program is a flat rate, anyone can participate program then it would not need staff to assess risk and underwrite policies. Thus, while it costs less to administer the cost to provide for the average individual is probably much higher then on the private side where, modulo gov’t regulation, there is still some small chance that subscribers pay in accordance to their risk.