Archduke Russell John wrote:Well, according to this site, Aetna's medical loss ratio in 2008 was 81.5%

I think what's going on now that I look into this a little, is what goes into that Medical Loss Ratio. It's in the insurance company interest to make that number big. So could they include broker fees in that number? They want to, but the gov't is pushing back on that, and they want that 80 or 85 pct to be money paid for medical care period. I don't think that's how it was defined in these examples.

There will probably be more jousting on the topic, but if Medical Loss doesn't tie back to financial statements, it's probably going to be pretty worthless.

And regarding Steve's comment, the concept of "cost-plus" contracting is how our gov't runs. Just about everyone who provides a professional service to the Feds has to deal with the limiting of profit you can make off the contract. They're just extending this concept to health insurance. It's not as radical as you're making it out to be.

geo

They're just extending this concept to health insurance. It's not as radical as you're making it out to be.

And cost plus, which is hugely popular with Armed Services suppliers ... comes down to what is defined as cost. Often its things that actually benefit the supplier but are dressed up as cost...
And in some cases the "plus" is based on a percentage, not a fixed number. In which case, running up the cost is to the benefit of the supplier.

Wringing efficiencies out of insurance companies will always come down to the "details". Is this necessary because there is no effective market in insurance, that effectively keeps down prices.? Why aren't market forces, all by themselves delivering efficiencies?
Surely the answer must be that medical demand is not a true market. (Demand always seems to grow beyond supply, as soon as a society decides that everyone has a right to access to some care.)
Note again, that if insurance efficiency is the percentage of medical insurance dollars actually spent on medicine then the US socialist medical systems out perform the private sector. You think they do this by denying fancy wheelchairs to all the double amputees?
The other element of "efficiency" not mentioned here is the value of the service provided by the dollar. What does Medicare pay for an appendectomy versus private insurers, for instance. That has to be added to the equation to understand whether or not private insurance is a truly viable option to arrive at a curbing of medical expenditures or whether it has too many built in problems that are only tinkered with, as in this example.