Healthcare Revisited –   Insurance Companies

I am not convinced that putting a middle man into providing health care makes much sense? If they can do it more efficiently, it does, but the facts are disturbing as you can see from the following:

Health Care Premiums Also Used for Lavish Salaries, Luxury Items, Underwriters

Nov. 3, 2009,  By KATE SNOW, ELIZABETH TRIBOLET and SUZAN CLARKE via

“A significant portion of health insurance premiums goes not for actual medical care but for private jets, generous CEO salaries, and underwriters who decide when to drop patients who become too expensive, according to a Senate committee report.

Sen. John D. Rockefeller, D-W.Va., chairman of the Senate Committee on Commerce, Science and Transportation, wrote to 15 of the biggest health insurance companies in August, asking them to provide information on how much of policyholders’ monthly premiums was spent on medical care versus the amount that went to administrative costs and company earnings.                                                                                                                   Such figures are known in the insurance industry-speak as “medical loss ratios.” But when insurance companies balked, saying the information was confidential and proprietary, Rockefeller’s investigators went digging through public documents and found that much of policyholder premiums were going to nonmedical costs.                                                                                                                       The insurance industry has long pointed to federal data that says about 87 percent of every dollar that people spend on premiums goes toward actual medical care, but Rockefeller’s investigators found the average for the top six insurance companies is closer to 82 cents on the dollar for medical care.                                                                                                                      That five-point difference represents billions of dollars. And when investigators broke down the information by insurance type, they found that people who buy individual insurance from those companies rather than being part of a small or large business, get the least bang for their buck. On average just 74 cents of every premium dollar for individual coverage goes to medical care. Coventry Health Care had the lowest figure at 66 cents”

I suspect the health insurance companies are excited by the Affordable Care Act. Now all of us must have health insurance, and we pay the penalty if we refuse!  We are better off taking the middleman completely out of the process.                                                                           That said, I am not in favor of completely decimating private medical insurance as long as they can provide comparable and competitively priced services. The fact that Medicare’s administrative costs run less than 2%. The average costs and profits for insurance companies at 26% is telling.                                                         How are the baseline countries handling health insurance? I am confident that an efficient system similar, to one already in place in another country, can be implemented by us.