California Medical Association (CMA), the state's largest physician group, has released a report ranking the state's insurers by the percentage of their budget spent on healthcare in 2005. The ranking is part of the group's campaign to get insurance companies to spend more money on medical costs--including doctor's reimbursements--and less on profits and overhead. Blue Cross of California (California's largest insurer) ranked the lowest. The insurer spent 78.9 percent of their revenue on medical costs, 11 percent on overhead and kept 10 percent as profit. Non-profit Kaiser Foundation Health Plan, by contrast, spent 93 percent of revenue on medical costs. No doubt the Kaiser brand could benefit from some positive coverage after its recent $5 million fine.
Chris Ohman, CEO of the California Association of Health Plans, contends that overhead doesn't necessarily mean insurers aren't spending money on patients. Money spent on administrative tasks can improve efficiency and patient care, even though it's not directly related to medical costs. He uses the example of disease management programs that take preventative measures that help cut down on more expensive hospital trips. Blue Cross of California, meanwhile, questions the CMA's methodology for conducting the rankings.
- read this Los Angeles Times article for more