One Blue plan says where it spends premiums

There is a lot of attention now on the financial stability of health insurers in the individual market following Aetna’s announcement about pulling back from individual coverage in eleven states.  Skeptics sometimes doubt whether financial losses cited in such news are truly the case. And the relative lack of transparency in health care often doesn’t help resolve such questions easily.

That’s part of why a “tweetstorm” today from Blue Cross Blue Shield of Louisiana economist Michael Bertaut was helpful. Mike took a break from flood-related topics to share these thoughts on how his Blue spends the premium dollar (aside: if you want to learn more about how life-altering the flooding in Baton Rouge has been, read Mike’s post on the topic at his employer’s blog).

Here’s the tweetstorm:

That was a lot of data packed into 140 character chunks, but here are a few key takeaways:

  • Many local Blue plans, like Louisiana are non-profits. They’re not charities and they’re not trying to maximize profits like publicly traded companies, but they’re not in business to lose money. Losing $65 million overall in 2015 based on an $80 million loss in the individual market is not sustainable. And those results are not uncommon for local insurers across the country.
  • 87 cents on the premium dollar is a lot of money on medical care. If administrative costs are only seven cents on the dollar, it becomes pretty clear what area of spending requires the most attention.
  • Tucked into that last tweet is the issue of prescription drug costs, a skyrocketing problem for every health insurer (and employers who self-fund their own benefits). Mike’s point is a provocative one: what else has to give in order to cover those soaring drug costs?

Interesting how more data can yield more questions, but transparency like this is a good addition to the discourse.