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IMAGE SOURCE: ©iStockphoto/ the cost of medical care/ author: JurgaR
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Caps on Profits?
Big Insurance is on the hot seat.
While for-profit insurance companies claim they use the majority of their premium dollars to pay medical claims, some Senators have uncovered that a smaller amount of premium dollar is going to pay claims than they’ve been told - with the rest going for profit, marketing, and administrative costs.
A Senate analysis was released this week along with word that Cigna Insurance has received a letter demanding the company disclose how much of the health insurance premiums it pockets.
Sen. John Rockefeller (D-WV) said, “While health care costs are spiraling upward, consumers are paying more and getting less, and the insurance industry doesn’t want anyone to know what they are up to.”
According to an analysis, filed by the Senate Commerce Committee, among the six largest insurers – 74 percent of an individual insurance plan goes to pay medical claims, 80 percent for small business, and 84 percent for large businesses.
America’s Health Insurance Plan, the industry lobby, says 87 percent of every premium dollar goes to pay claims, in industry jargon known as medical loss ratio. Cigna claims it spent 93 cents of every dollar on individual medical claims.
In comparison, Medicare pays about 98 to 99 percent of its revenue on claims, reports Frontline in a PBS documentary on the insurance industry.
Under health care reform introduced in the House, the insurance companies would have to rebate customers if less than 85 percent of their fee is spent on actual health care, reports Reuters.
Rockefeller says he plans to push for similar legislation in the Senate.
But the insurance industry is opposed to caps on profit, says Robert Zirkelback of America’s Health Insurance plan to the NY Times,
“Having these arbitrary caps will undermine other reform efforts to improve patient care and cut health care costs,” said Zirkelback.
The insurers “need to tell us how they are spending their customers’ money,” Mr. Rockefeller said in a statement he released on Monday along with the committee’s analysis.
“Are they spending it to make people well when they are sick and keep them healthy?” he asked. “Or is the money they charge going to profits, to executive salaries, and to figuring out how to deny care to people when they really need it?”#