Insurance Companies Are Getting Over On Students Too?
We recently reported that top health insurance companies were not spending the appropriate amount of premium dollars on medical claims (see story: Senate Analysis on Health Insurance), now it seems that students are also getting the shaft when it comes to their insurance policies. According to a recent study conducted by the Division of Health Care Finance and Policy in Massachusetts, many private health providers in the state are making between three and 13 times more in profits on their student subscribers than their typical enrollees.
Reports from the study showed that companies like Aetna and HPIC showed sizable profit margins for policies held by students in comparison to other enrollees. Here are a few stats from the report:
- Aetna showed an 11 percent profit margin as a result of student health plans
- United saw a profit margin of 27 percent
- Health Partners International of Canada (HPIC ) brought in 26 percent in profits
- Security Mutual earned a 22-percent profit margin
In average, private insurers posted a tw0-percent profit, showing that substantial difference in what the above companies gained.
Where Are Premium Dollars Being Spent?
With the companies posting higher-than-average profits for student enrollees, it makes you wonder exactly where the premium dollars are being spent. Based on average yearly premiums of $1,216 for students, the report provided some interesting figures:
- $11 of students’ monthly premiums between 2005 and 2008 went to company profits
- $21 went to administrative costs
- $72 went to pay for medical services
There has been no information released as of yet to explain the companies’ decision to designate more premium dollars of student enrollees to profits than other enrollees. However, state consumer groups have been weighing on the report, meaning adjustments may be made soon enough.