JAMA Forum: Where Does the Health Insurance Premium Dollar Go? 

What do you want most, freedom of choice among health care providers or freedom of choice among insurance companies? 

Now if your answer is the former, could you live with a single-payer system? Of course, even given the issue related below, insurance is not the driver of health care costs, it’s the health care system … and you of course😷

As already noted, the AHIP reports that insurers had an average profit margin (net profits divided by premium revenue) of only 2.7%. The number seems low, perhaps because it is a simple average. Profit margins for the larger US health insurers, for example, actually were much higher  than just 3% in recent years, with 4.7% for Aetna, 7.0% for Cigna, and 4.6% for United Health Group in 2015 and 3.5% for Anthem in 2014. (These numbers, however, also include the Medicare Advantage program for older people.) …

QC NOTE: By comparison Apples profit margin on its sales is about 38%😐

A “must read” in this regard is a recent article by Elizabeth Rosenthal, MD, “Indecipherable Medical Bills? They’re One Reason Health Care Costs So Much.” Rosenthal describes a costly “coding war” in which physicians, hospitals, and others who treat patients seek to maximize their profits by hiring legions of consultants who know how to “upcode” procedures in their medical bills. For their part, insurers hire legions of coding consultants who know how to protect insurers from such upcoding. Rosenthal vividly describes how individual patients can get mauled in the process.

We can think of the extraordinarily high overhead imposed on insured individuals and patients in the United States as the price they seem to be willing to pay for the privilege of choice among health insurers and, for each insurer, among multiple different insurance products. US consumers seem so fanatic about this choice that to keep it, they have been willing to give up their erstwhile freedom of choice among physicians, hospitals, and other clinicians and health care facilities. Citizens of most other countries have made that trade-off in exactly the opposite direction.

One can only hope that for the high price US consumers seem willing to pay for choice among insurers, they get their money’s worth in extra benefits.

Source: JAMA Forum: Where Does the Health Insurance Premium Dollar Go? – news@JAMA


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