There are several answers to this. I am sorry to self promote, but if you go to my blog – Notes from the Southern Heartland (https://www.ajlayon.com) and look at the 3-part series “Problems in Paradise” I go over this in some detail.

The best work I’ve seen on this question is by Dr. Stephie Woolhandler (New England Journal of Medicine, 2001). She calculates that the figure is about 30%….that is 30 cents of every dollar is spent on administering health care, at least for the private companies (UHC, BCBS, Humana, etc). For the federal programs (Medicare, Medicaid), it is more like 7% to 15% (7 to 15 cents on the dollar).

It is true that the Affordable Care Act mandates that 85% of each premium dollar be spent on care – what insurance companies call perversely a medical loss – but the insurance companies are fighting this tooth and nail and are trying to re-define “care” in ways that covers administrative costs.

If we decreased the administrative costs the privates consume to the federal level, there would be something on the order of $ 290 to $ 320 billion more dollars to spend on caring for our people.

Take a look at the blog if you want more detail.