Thursday, June 21, 2007

Keeping Score

Insurance companies, for all their maddening business practices, are mostly just moving money around in the health care business. They are the middle man. They collect a ton of premiums from a broad group of people and then pay most of it in medical bills for the relative few who get sick or injured each year. About 85 percent of the money they take in goes right back out in payments to doctors, hospitals, labs and drug companies.

85%? What about those who claim that carriers WASTE 30%+ and a government run system is less than 5%?

look at what has happened in California in recent years. According to reports on file with the Department of Managed Health Care, the seven largest insurers have seen their revenues climb from $45 billion in 2002 to $71 billion in 2006. That sounds ominous. These firms are taking in 58 percent more than they were just a few years ago.

But guess what? During that same period, the medical expenses those seven companies paid out on our claims climbed from $40 billion to $62 billion. That's an increase of 55 percent.

More coming in, but an almost equal amount going out.

But what about profits?

Take away the profits -- all of them -- and assume the companies would have charged us that much less, and their revenues would have risen by 51 percent instead of 58 percent. In other words, if you want to take a significant bite out of the cost of health care, you're just going to have to look somewhere else.

Something that has been drummed at InsureBlog on more than one occasion.
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