WASHINGTON, May 21 - With Americans increasingly concerned about rising health care costs, the U.S. PIRG Education Fund today released a report finding that health insurers can cut overhead and increase patient care.
More Bang for the Health Care Buck: How an Efficiency Standard for Health Insurers Can Reduce Overhead and Deliver More Patient Care, examines how much health insurers spend on health care benefits, rather than administrative overhead.
The report concludes that an efficiency standard requiring insurers to spend 85% of their revenues on patient care is a realistic, achievable standard that will reduce the cost of health care and provide higher-value coverage.
When consumers buy health insurance, they have no guarantee of a fair return on their health care dollar. Premiums should go primarily towards care, but they sometimes go disproportionately to administrative overhead instead. While some administrative costs are inevitable, insurers also spend billions of dollars attempting to shift costs onto providers, and processing duplicative, overly-complex paperwork.
To encourage efficiency and get costs under control, some states have considered legislation that would require insurers to spend 85 percent of the premiums they take in on health care, rather than administrative costs, profits, and other expenses.
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U.S. PIRG Education Fund conducts research and public education on emerging public interest issues.
