By Tim Redmond
Fascinating interview this morning on Forum with Wendell Potter, former PR person for CIGNA insurance who has now become an outspoken critic of the health-insurance industry.
One little nugget that I hadn’t known about:
Most publicly traded companies worry about their price-to-earnings ratio and some other basic financial data. The health insurance industry has another indicator: The medical benefits ratio. That’s the percentage of premiums that get paid out in benefits.
Fifteen years ago, the last time the Democrats tried health-care reform, the typical insurance company had a 95 percent ratio — that is, 95 cents out of every premium dollar was paid back out in benefits. Now the big companies are down below 80 percent — and every time that number starts to creep up, their stock price tumbles.
And there are, of course, only two ways to keep that ratio low: Raise insurance rates, and reduce benefits. That’s one key reason why rates keep going up — and why the insurance companies try so hard to avoid paying benefits.
And it’s another key reason why no solution that involves the private insurance industry will ever solve the nation’s health-care crisis.