Insight, analysis & opinion from Joe Paduda

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Jan
31

Private insurer profits

Bob Laszewski of Health Policy and Strategy Associates (no affiliation with HSA) notes that CMS’ latest health care cost report includes the following:
“in 2002, the percentage of health insurance premiums spent on profit and admin expense was 12.8%; in 2003, the expense and profit ratio had rised to 13.6%. Undoubtedly, this gain is not in expenses but in health insurance company profits.”
This occured at a time when overall health care costs were still increasing by almost 9% a year.
At the risk of stating the obvious, profits and admin expenses have increased at a rate greater than that of total medical expenses. Not only does this not say much for the “efficiency” of the private market, it also may add fuel to the argument againts private insurance.
We’ll have more details on the CMS report’s notable findings in a future post.


Joe Paduda is the principal of Health Strategy Associates

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A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.

 

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