“[I]nsurers selling individual health plans spend 29 percent of the premiums they receive on administration, largely because they employ so many people to screen applicants. This compares with costs of 12 percent for group plans and just 3 percent for Medicare.”
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There’s truth in that, but the other factor is that individual plans spend a lot less per person (about $2,500 per person) than group plans (about $4,000 per person) which in turn spend a lot less per person than Medicare (abouit $12,000 per person) due to the relative healthiness of the groups involved.
Screening cost per beneficiary would be a better measure. In raw dollars it is about $750 for individual plans, $480 for gropu plans and about $360 for Medicare. This still shows the same trend, but far less dramatically. Even an extremely efficient individual insurance market would still spend about 12% on screening.