Senate Analysis Shows Health Insurance Premium Dollars Not Going to Claims
For-profit insurance companies are on the hot seat after Senators have discovered that the companies have been using premium dollars deceptively. The companies have been reporting that they use a large majority of premium dollars strictly to pay medical claims, when in actuality, a much smaller amount is been applied to claims while the rest go to marketing, administrative costs, and of course profit.
A Senate analysis, released the second week of Nov. 2009, revealed that consumers are indeed getting the shaft on their premium dollars spent. When looking at the six largest insurers, the analysis showed that the following amounts were applied to medical claims in insurance plans:
- 74 percent is set aside for individual insurance plans.
- For small businesses, 80 percent is set aside.
- 84 percent is set aside for large businesses.
These numbers differ drastically from Medicare, which is reported to pay as much as 98 to 99 percent of its revenue on claims.
In other words, consumers in private plans are paying more than ever for their health insurance premiums and actually getting less in return, Sen. John Rockefeller (D-WV) explained.
He is pushing for health care reform in Senate that is similar to that in House, which would require insurance companies to rebate customers if they spend less than 85 percent of their premium on actual health care.
The insurance industry is opposed to putting any type of cap on profit, claiming that this will undermine other reform efforts to cut costs and improve patient care. However, Rockefeller disagrees and plans to continue his push in Senate.
How do you feel about your insurance company using some of your premium payment for profit?