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Social Security Administrative Costs: Still Low

I don't know a whole lot about corporate conventions, but Kevin Drum seems to have the goods on the training that the Social Security Administration put on in Phoenix, Arizona last week. I mean, would you want to visit Pheonix, Arizona, in July? I just typed those words into Google, and here's what I got:


Yikes. Meanwhile, the facts are much as they've always been: The administrative costs of the main Social Security program are 0.6 percent of expenditures. The disability insurance program clocks in a bit higher: 2.3 percent. It's all pretty lean.

By Ezra Klein  |  July 13, 2009; 3:03 PM ET
Categories:  Social Security  
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"It's all pretty lean."

Have you ever dealt with the SS Administration? I have. What a pain. Lean and lazy.

Posted by: ostap666 | July 13, 2009 3:57 PM | Report abuse

Obviously, they're not spending a ton on their website. Have you tried that thing? Terrible.

Posted by: BeatKing11 | July 13, 2009 6:30 PM | Report abuse

So why wasn't my comment approved?

Posted by: flounder2 | July 13, 2009 9:02 PM | Report abuse

Huh, that's stupid. I wrote a comment earlier about local Phoenix TV and I got a message that you were moderating comments. Anyways, last week ABC 9News had a story one night about how terrible the Hotel business was in Phoenix. They were talking about how these 4 and 5 star hotels had rooms under a hundred bucks in order to gin up some conferences and they were begging people to take "staycations".
The very next night they reported this story and acted very offended that the government was spending money in the Valley. One of the talking heads said it was disgraceful because it is "nearly impossible" to get your Social Security these days. I commented to my wife (who also recently had her VA PTSD research conference moved from nice Denver to desert hellhole Phoenix in order to save money) that if Social Security is "nearly impossible" to get, how is it that all these old people manage to get signed up?

Posted by: flounder2 | July 13, 2009 9:08 PM | Report abuse

Have you ever tried to deal w/ the SS administration? They make the DMV look competent.

Posted by: fallsmeadjc | July 13, 2009 11:49 PM | Report abuse

Ezra along those same lines. Heritage is flogging a study that purports to show that private insurance is more efficient than Medicare. In response to that Paul Van de Water (a VERY heavy hitter in these matters forwarded the following to a group I belong to. I thought the last line the most fascinating:

Paul: The first problem with the Heritage paper is that it incorrectly inflates Medicare’s administrative expenses. Here’s what a forthcoming NASI report will have to say on the matter:

“Some writers contend that the usual estimates of administrative costs overstate the difference between traditional Medicare and private insurance, but these claims are largely without merit. Notably, Matthews (2006) and Zycher (2007) attribute to Medicare certain federal legislative, executive, and judicial costs in proportion to Medicare’s share of total (or, in some cases, non-defense) federal outlays. Although federal agencies other than CMS undoubtedly incur some unreimbursed costs related to Medicare, this method of allocation vastly overstates these costs. Moreover, it ignores the fact that private insurance likewise imposes administrative costs on the Congress, state legislatures, insurance departments, the judicial system, and other agencies.”

Medicare’s administrative expenses for 2005 (the last year shown in the Heritage table) according to the National Health Expenditure accounts were $10.6 billion—just about half the number that Heritage shows. Using the NHE estimate, Medicare’s administrative costs are substantially lower than PHI even on a per beneficiary basis.

It must also be remembered that the administrative costs of Medicare shown in the National Health Expenditure accounts include the administrative costs of Medicare Advantage and prescription drug plans, which are higher than those of traditional Medicare. Within Medicare, administrative costs are roughly 2 percent for traditional Medicare and 11 percent for Medicare Advantage plans (CBO 2006).

Posted by: BruceWebb | July 14, 2009 12:57 PM | Report abuse

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