Ask your typical national health plan, and they'll tell you that they spend somewhere in the range of 87 cents per premium dollar on medical payments. Of course, they call that the "medical-loss ratio," which of course suggests that they're planning to spend as little of that as possible, but all say that they're doing right by their beneficiaries.
Say what they like, they're not convincing Senator J Rockefeller (D-WV). He says that the industry's 87 cent figure is bunk, and that as little as 66 cents per premium dollar actually goes to healthcare providers. The rest, he argues, is going to administrative costs, marketing and company profits.
According to Rockefeller's calculations, the six largest for-profit health plans spent 74 percent of individual policyholders' premium dollars, and 80 percent of premiums for small-business policies.
The Senator, who held a series of hearings on health plan business practices earlier this year, is pushing to include rules in the House reform bill that would require health plans to spend at least 85 cents per premium dollar on claims.
Even if he doesn't succeed, however, state laws may accomplish the same goal. Several states have been considering laws to set their own mandatory minimums on medical spending by health plans.
To look at Rockefeller's analysis:
- read this Kaiser Health News item
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