Obamacare will add more than $270 billion in overhead costs for insurers and the federal government over the next seven years, a new study reveals.
Nearly two-thirds of the new overhead, $172.2 billion, goes to increased private insurer’s administrative costs due to rising enrollment. The rest go to expanded government programs such as Medicaid, according to the study released Tuesday in the blog for the journal Health Affairs.
In addition to Medicaid, the overhead costs go toward running the health exchanges for Obamacare, according to authors David Himmelstein and Steffie Woolhandler, professors at the City University of New York School of Public Health.
The professors estimated the overhead costs after examining projections released by the federal government in July.
The best solution to pare down is to move toward a universal single-payer health system, such as that in Canada or Taiwan, which would yield administrative savings of $375 billion in savings, the authors said.
Single payer saves money because it has a simplified financing system, according to a 2014 study in Biomed Central Health Services Research.
“In health care, public insurance gives much more bang for each buck,” write Himmelstein and Woolhandler.
