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Reply #36: Wendell Potter said the average medical loss ratio was 95% in the early 90's.... [View All]

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slipslidingaway Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Nov-04-09 03:29 PM
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36. Wendell Potter said the average medical loss ratio was 95% in the early 90's....
and according to this article the average is now 85.2%.

Also mentioned in the second article is shrinking enrollment and they know when the baby boomers begin retiring in the next couples of years it will get worse - but now we'll have mandates.


"...The American Medical News on August 24 reported that, for the second quarter of this year, the average medical loss ratio of the largest publicly traded health plans was 85.2%, but ranged from 82.9% to 86.8%..."

"...After years when that ratio stayed around 80%, Aetna, Health Net, Cigna and Coventry all have seen it jump above 86%.

Part of the problem is shrinking membership. Aetna, Cigna, Coventry Health Care, Health Net, Humana, WellPoint and United covered a collective 117.7 million people during the second quarter of 2008. That number was about 2 million less for the same period this year..."

"WENDELL POTTER: Well, there's a measure of profitability that investors look to, and it's called a medical loss ratio. And it's unique to the health insurance industry. And by medical loss ratio, I mean that it's a measure that tells investors or anyone else how much of a premium dollar is used by the insurance company to actually pay medical claims. And that has been shrinking, over the years, since the industry's been dominated by, or become dominated by for-profit insurance companies. Back in the early '90s, or back during the time that the Clinton plan was being debated, 95 cents out of every dollar was sent, you know, on average was used by the insurance companies to pay claims. Last year, it was down to just slightly above 80 percent.

So, investors want that to keep shrinking. And if they see that an insurance company has not done what they think meets their expectations with the medical loss ratio, they'll punish them. Investors will start leaving in droves..."

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