A pox on health insurance companies!

Before insurance companies became profit-making enterprises, they generally spent 95 cents out of every premium dollar on medical care. That percentage is called their “medical loss ratio.” After becoming huge money-making businesses in the ‘90s, their medical loss ratios went as low as 64.4 (Texas Blues). In other words, Texas Blues spent 64.4 percent on medical care and 45.6 percent on marketing, lobbying, administration, paying dividends, and astronomical salaries for their CEOs. (WellPoint’s Angela Braly “earned” $20 million in 2012, for example.) Insurance companies’ priorities are their investors, not patients.

Consider this: Medicare uses 98 percent of its funding for healthcare and only 2 percent on administration. To try to bring insurance companies closer in line with Medicare, framers of the Affordable Care Act (Obamacare) included a provision requiring them to spend 80 to 85 percent of every premium dollar on patient care. The insurers fought bitterly against this provision. Nevertheless, it was included in the ACA and hailed as a victory for consumers. But it wasn’t, really. To make up for the loss, companies simply increase premiums, co-payments, and deductibles. In 2015, Anthem Blue Cross raised premiums on some of its California ACA policies by 25 percent.

 Making big payouts to medical providers is no problem for the companies. The bigger the payout, the bigger their slice of the pie. Even with the 80 percent they are required to spend on the cost of the medical care, they can make big bucks on big payouts. If their payout is $100, they can keep $20 of the premium dollars. But if their payout is $100,000 they keep $20,000. As one owner of an employee benefits company says of insurance companies, “They don’t care whether the claims go up or down 20 percent as long as they get their piece. They’re too big to care about you.”

For an introduction to this blog, see I Just Say No; for a list of blog topics, click the Topics tab.