The Homa Files

There’s still a lot of chatter about how evil health insurance companies are causing health care costs to continue to soar.  The implication is that the increases are largely attributable to their expanding profit margins and astronomical exec bonuses.

Then, a WSJ op-ed got me thinking.

The punch line: Blue Shield of California announced that it was upping premiums by as much as 39% to cover increases in the underlying cost of health care and the added costs of ObamaCare – e.g. coverage for adult children and pre-existing conditions.

Here’s the rub: Blue Shield of CA is a not-for-profit insurer. All they do is collect premiums and pay health providers – and try to breakeven at the end of the year. So, their premium increases can’t be demonized as profiteering. If they have to pay more out, they simply adjust premiums to cover the difference.

Got me wondering:  how much of the health insurance business is handled by not-for-profits?

About 275 million Americans have health insurance … roughly 1/3 of them are covered by Medicare or Medicaid.

• Note: these folks account for almost half of healthcare expenditures.
  http://www.healthpaconline.net/health-care-statistics-in-the-united-states.htm

Since the gov’t doesn’t engage in profiteering, we can dismiss 1/3 of insureds and half of health care expenditures as irrelevant to the profiteering argument.

OK, we’re down to 200 million insureds.

There are plenty of NFP insurance companies, but the biggie is Blue Cross / Blue Shield.

From their web site: Health plan providers affiliated with the Blue Cross and Blue Shield Association (BCBSA) — known as “the Blues” — serve more than 100 million members nationwide.

So, at most, for profit health insurance companies cover about 1/3 of all insureds – and handle less than 1/4 of all health care expenditures.

Looks to me, like premiums are going up because healthcare costs are going up … not because of profiteering.

Maybe I’m missing something …

This entry was posted on January 21, 2011 at 6:38 am and is filed under Health Care / Medical Insurance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.