That's just the most glaring of several assumptions made in this piece that strip away any real value. As a bonus, it's much more relevant to compare Medicaid (not Medicare) and private insurance, though it's more challenging -- since Medicaid is distributed across multiple states -- and still isn't entirely valid (pears to apples, maybe?) But rather than take that route, this study compares the two most disparate elements, then tries to draw conclusions based on a lot of systemic assumptions.

All in all, this doesn't add much to the discussion, since it's both extremely limited and glosses over some significant informational gaps.

Link

Then there is this part from the CBO testimony,

HMOs and PPOs incur substantial administrative costs to establish and maintain networks of providers, to acquire and maintain enrollment, and to manage utilization. To the extent that they negotiate payment rates with providers that are higher than Medicare’s payment rates for services furnished in the fee-for-service sector, those plans may also incur higher costs for medical services. Private health plans that participate in Medicare have higher administrative costs per enrollee than the
traditional Medicare program does because of their smaller scale of operations and their costs associated with network development and retention, care management, marketing, and reinsurance.

Geez, didn't see that in Krugman's blog post.

And here is the actual report that Hacker is relying on. Here is the relevant section from the report,

Administrative Costs. Private health plans that participate in Medicare have higher administrative costs per enrollee than the traditional Medicare program because of their smaller scale of operations and their costs associated with marketing, utilization management, network development and retention, and reinsurance. Administrative costs and return on investment account for about 11 percent of private plans’ costs of delivering Medicare benefits, whereas the administrative costs of the fee-for-service Medicare program (as reported by CMS) account for less than 2 percent of its expenditures.17 There is some disagreement among analysts about the size of that difference in costs, however. Some analysts contend that the latter estimate understates the administrative costs of the Medicare program because it excludes some costs that should be allocated to Medicare, such as portions of the salaries of legislators, legislative staff, and CMS administrators; depreciation on certain federal office buildings; and the costs of collecting Medicare premiums and payroll taxes.18 Following that reasoning, however, a portion of those additional costs should also be allocated to the Medicare Advantage program.

The higher administrative costs of private plans do not imply that those plans are less efficient than the traditional FFS program. Some of the plans’ administrative expenses are for functions, such as utilization management and quality improvement, that are designed to increase the efficiency of care delivery.

Whoops didin't see that in Hacker or Kurgman's "writings"...oh what the Hell, propaganda. See Barry, its a double edged sword. Not quite the "apples to apples" comparison...according to Hacker's own source...the CBO.

Now to be fair, I don't know where the Heritage propaganda puts the Medicare Advantage people. Are they Medicare or Private? There are a fair number of them, so taking them into account would be a good idea.

We can say the same for anyone who has an agenda, that includes Krugman, you, me, Obama, etc. Right on down the line. Evaluate the argument, the data, and the methods, then decide on those. Krugman's way is nothing short of an ad hominem: they are poopy heads and therefore wrong.

Edit: What is even more hilarious is that Krugman is quoting an "Institute" with a "K-Street" address. A lobbying group--i.e. a propaganda group. Shorter Krugman: my propaganda beats your propagands. Just like in the Sunday morning chop-socki flicks I used to watch as a kid.

Michael,

Can you be a little more specific that "bulk"? Is it a 90/10 split, or a 60/40 split? Better yet, lets get a break-down per-program, per-beneficiary and per-claim administrative cost percentage.

You will likely never get the last two due to privacy reasons. As for the splits, look at the link, see where the data takes you. For example, look at this table that is at the link, there are a nubmer of sources some it appears you can download data from.

Michael Reynolds,

Yes, because you have a pre-existing condition. As such you cannot get insurance. You cannot get insurance because you already are in the state that you wish to insure against. It is like wanting to buy car insurance after you have been in an accident. It sucks, but that is how insurance works.

Ever heard this one?
"Hi, I'm from the Government and I'm here to help you!"
I hear it's one of the top three.

The game; wink, wink,is how to ask the questions.

After laying out his reasons, he states:

"You should always remember:

1. Don’t believe anything Heritage says.

2. If you find what Heritage is saying plausible, remember rule 1."

Yet the bulk of administrative costs are incurred on a fixed program-level or a per-beneficiary basis.

Can you be a little more specific that "bulk"? Is it a 90/10 split, or a 60/40 split? Better yet, lets get a break-down per-program, per-beneficiary and per-claim administrative cost percentage. Otherwise you're comparing oranges to apples, while complaining that they are comparing apples to oranges.

Basically private insurers force me to spend money and in the meantime leave all my assets at risk. Factor that in.

Give me a government plan, I'll take it.