posted
(Passing this on, even tho I think it tilts too far toward the insurance industry view. Am questioning the administrative costs and the profit margin. They say pharma has a profit margin of 16%, but I have heard previously that it was closer to 30%.
They also say insurance companies try to push doctors into best practices methods, but in the case of tickborne diseases, it would seem that best practices are those that result in the least treatment, whether it is adequate or not. Best practices for what?????
One thing that certainly rings true is that doctors avoid complex cases. Bet the actual percentage is really higher than 40+%.)
7 secrets of health insurers
To really understand your coverage, you need to know about a lot more than just your deductibles and copayments.
By Insure.com
Health insurance can seem impenetrable. For starters, have you tried reading your policy? It's dense. With different regulations in each state, countless varieties of policies and elusive pricing practices, health insurance can seem downright confounding.
And wrapped up in all this are myths about health insurance that were perhaps once true -- or never were. Here's a look at seven things you probably didn't know about your health insurer.
1. Health insurers' profit is about 3%.
Health insurers rack up revenues of $723 billion a year, according to data from the Centers for Medicare & Medicaid Services. So you might think they make money hand over fist.
But with the costs of health care and prescription drugs rising every year, health insurers generally eke out only about a 3% profit. Health insurers would, in fact, make a bigger profit by selling toys to children.
By comparison, here are profit margins for other businesses, according to Hemscott, an independent financial data provider:
* 1.6% for grocery stores.
* 4.3% for toy stores.
* 6.5% for life insurance companies.
* 8.0% for resorts and casinos.
* 8.2% for property and casualty insurers.
* 16.1% for cigarette makers.
* 16.8% for major drug manufacturers.
The federal data show that almost 86 cents of every dollar you pay for health insurance premiums goes to pay for medical services such as doctor visits, prescription drugs and hospital costs.According to a 2006 PricewaterhouseCoopers study conducted for America's Health Insurance Plans, an industry trade group representing about 1,300 companies, the remainder of your premium dollar is spent on the following:
* 5 cents for policyholder services such as prevention, disease management, care coordination and investments in health information technology, plus provider support and marketing.
* About 6 cents for insurers' administrative costs, including claims processing and compliance with government regulations.
* 3 cents for health insurance plan profits.
2. Your health insurer regularly pays for unnecessary medical tests.
The cost of medical liability goes beyond legal costs for health insurance companies: About 10 cents of the nearly 86 cents spent on medical services goes to medical liability and the practice of defensive medicine.
Video on MSN Money Insurance needs � Siri Stafford / Photodisc Red /
Get your claims paid
Good records, detailed claims and persistence help you get your money faster and avoid problems. In these litigious times, doctors often feel they must cover all the bases when a patient comes in with a health complaint. That can mean rounds of tests to rule out far-fetched conditions or even prescriptions handed out because patients demand them.
In Pennsylvania, for example, where there is no cap on jury awards, more than 90% of physicians admitted practicing defensive medicine, according to a 2005 study in The Journal of the American Medical Association:
* 43% used imaging technology when it wasn't necessary.
* More than 50% referred patients to other specialists.
* 70% of emergency physicians ordered additional diagnostic tests.
* One-third prescribed more medications than were necessary.
* 60% used unwarranted invasive procedures.
* 42% restricted their practices by eliminating procedures such as trauma surgery and avoiding patients with complex medical issues.
Continued: Commission
3. Health insurers typically pay a 10% to 20% commission to agents.
If you buy an individual policy from an agent, he or she generally makes that commission on your initial purchase and every year you renew.
4. You can take your health insurance gripe to an external review panel.
All grievances about your health insurance -- such as coverage denials or other claims problems -- start with a formal complaint directly to your insurer. But if you don't receive satisfaction from your insurer's own complaint-resolution process, you can make your case to an external review panel.
Only six states -- Idaho, Mississippi, Nebraska, North Dakota, South Dakota and Wyoming -- lack laws mandating external grievance panels, according to the Kaiser Family Foundation. Even in states without a law, though, health insurers have a grievance process.
HealthClaimsAppeals.org can guide you through the process of resolving an insurance dispute.
5. Your insurer may provide financial incentives to doctors who give you "best practices" treatment.
Health insurers are increasingly looking for ways to ensure patients receive the most effective care possible, which ultimately reduces health care costs and reduces patients' chances of developing chronic conditions.
Your doctor may have a "pay for performance" agreement with your health insurer, in which he or she gets higher reimbursement rates when prescribing treatments that line up with best-practices guidelines.
6. You might not be able to sue your health insurer.
Only 17 states have laws mandating that you can sue your health insurer in civil court in order to hold it accountable for treatment decisions, according to the Kaiser Family Foundation.
Those states are Arizona, California, Georgia, Illinois, Maine, Minnesota, Missouri, New Hampshire, New Jersey, North Carolina, Oklahoma, Oregon, South Dakota, Tennessee, Texas, Washington and West Virginia.
7. Your health insurer may be entitled to take your auto insurance settlement after an accident.
It's legal in most cases for a health insurer to place a lien on any third-party settlement money you get from an auto insurer after an accident if your health insurer has paid for your treatment from an accident. This practice, known as subrogation, simply means "substituting one for another." Video on MSN Money Insurance needs � Siri Stafford / Photodisc Red / Getty Images Get your claims paid Good records, detailed claims and persistence help you get your money faster and avoid problems. Health insurers are allowed to recoup the cost of your medical care from the settlement you receive from the person who injured you. For example, if your auto accident medical expenses total $5,000 and you win a $10,000 settlement, your health insurer can take half -- but only if its "rights of recovery" are spelled out in your plan agreement or summary of benefits.
Published Aug. 28, 2008
Posts: 8430 | From Not available | Registered: Oct 2000
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seekhelp
Frequent Contributor (5K+ posts)
Member # 15067
posted
I have much experience with benefit plans, health insurer cost structures, etc. These are very true statements. Claims do account for 85-87% of total dolllars spent on premiums. The overhead expense ratios are pretty accurate as well.
I am not educated enought on big Pharma profit margins. I just dealt with 3rd party companies called PBMs and understand them well.
Posts: 7545 | From The 5th Dimension - The Twilight Zone | Registered: Mar 2008
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posted
Thanks for your response. I wonder if there is a difference in for-profit companies vs. nonprofits? Also, I don't see how they could be using most of the money on claims when they have shareholders that are being well-rewarded.
For instance, Wellpoint which is a for-profit company listed as one of the ten worst health insurance companies by a consumer group, is nevertheless rated by investment advisors as a good place for money. How can a company produce good rates of returns for stockholders and still do an honest job of serving clients? I think these goals are mutually exclusive.
And the managers of these companies have very high pay packages.
Perhaps you have heard of the companies that drop customers when they get sick. BX in CA has been sued and being investigated by the attorney general for these practices.
Posts: 8430 | From Not available | Registered: Oct 2000
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treepatrol
Honored Contributor (10K+ posts)
Member # 4117
posted
Thanks Lou
-------------------- Do unto others as you would have them do unto you. Remember Iam not a Doctor Just someone struggling like you with Tick Borne Diseases.
seekhelp
Frequent Contributor (5K+ posts)
Member # 15067
posted
Lou,
The difference between profits and non-profits is usually 2-3% loaded into rates for a so-called profit margin above typioal expenses. Most expenses are similar and consist of claims expense, administration (cost to pay employees AND top shareholders gobs of money), contingency fees and something called risk charges.
Basically, all insurers need to hold adequate claim reserves as mandated by federal / state institutions. The rates between a profit / non-profit organization may not reflect these nuances because they all have different costs of doing business, different target markets, etc.
You may think those shareholder / executive salaries are astronomical. They are by any normal working person's standards. BUT, the cost of claims is ridiculously high in comparison. The average ocst "per person" for claims for now a family is about $11-$13k.
Given the precious benefit packages offered to municipal / governemtn workers, etc., pump that up to $20k per year. Now, that's a combined cost for HEALTHY and sick people (law of averages). 1,000,000 families x $12k per year = $1,200,000,000. Does that 6500k annual salary seem so big now?
Financial performance and patient statisfaction are an apple and an orange. If I was a shareholder in a insurance company, I'd love the ISDA rules. I wouldn't like docs saying everyone has clinical Lyme and my investment shelling out $100k in treatment based on guessing. In fact, I'd guess in many cases, there is a direct opposite effect between the two measures.
They should be a combined goal, but as we all know..money talks. LLMDs aren't any different charging $900 for a consultation in NY! I was astounded. Money makes the world go around and it always will in this fine country.
quote:Originally posted by lou: Thanks for your response. I wonder if there is a difference in for-profit companies vs. nonprofits? Also, I don't see how they could be using most of the money on claims when they have shareholders that are being well-rewarded.
For instance, Wellpoint which is a for-profit company listed as one of the ten worst health insurance companies by a consumer group, is nevertheless rated by investment advisors as a good place for money. How can a company produce good rates of returns for stockholders and still do an honest job of serving clients? I think these goals are mutually exclusive.
And the managers of these companies have very high pay packages.
Perhaps you have heard of the companies that drop customers when they get sick. BX in CA has been sued and being investigated by the attorney general for these practices.
Posts: 7545 | From The 5th Dimension - The Twilight Zone | Registered: Mar 2008
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posted
LLMDs have to charge a fortune so they can afford court cost when the insurance companies attempt to take their license.
I don't know where that article is getting there numbers from but if you go look at insurance companies balance sheets and income statements, they sure look to be doing better than 3% profit, most are around at least 5%. That number is even a low indicator as it stands since these companies can write off anything considered R&D which ends up being the money they use to pay employees to deny coverage to patients and find new ways to avoid paying out claims.
Posts: 499 | From Indiana | Registered: Oct 2007
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posted
The "best practices" is funny. I'm certain that it means as little treatment as they can get away with!
-------------------- Just because it' s not nice doesn' t mean it' s not miraculous. --Terry Pratchett Posts: 121 | From Nazareth, PA | Registered: May 2008
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