During last Wednesday’s presidential debate, President Obama claimed that the private sector just can’t match the leanness and efficiency of the federal government. He was speaking specifically about privately covered health care versus government-run health care. Obama said, “Jim, if I — if I can just respond very quickly, first of all, every study has shown that Medicare has lower administrative costs than private insurance does, which is why seniors are generally pretty happy with it. And private insurers have to make a profit. Nothing wrong with that. That’s what they do. And so you’ve got higher administrative costs, plus profit on top of that.” 

But the facts don’t back up Obama. Last year, the Government Accountability Office (GAO) estimated that Medicare loses a staggering $48 billion a year simply because of fraudulent or improper payments. In comparison, the profits of the nation’s ten largest health insurance companies last year were a combined $13.7 billion. In other words, Medicare loses three-and-a-half times what the ten largest private health insurers make.