30% of all insurance premiums go to overhead, medicare spends 2%.[/quote]
If the incumbent insurance companies are needlessly spending money on overhead, then you should raise a venture capital fund and go buy one of them, cut out the fat, then resell it and retire wealthy beyond any dream. Hmmm, considering that there are $$billions and $$billions of private equity money sitting on the sidelines then why havent any of them done this? (HINT: Because the 30% figure is either a fiction or reflects a necesary cost of doing business.)
In other words, it is naive to think that there is 30% fat in the premiums charged. If there were, then the first company to cut back thier fat could (and would!) do that, lower thier premiums and grow, or enjoy increased margins (or some combination of both)!
How was the 30% figure calculated? Is there a cite for that data point or is it just parroted from something seen on TV? Likewise on the 2% of premiums paid to Medicare – whats in this number? Most medicare spending is funded by payroll tax not by premiums so that immediately becomes a suspect figure.
