Page Minemeyer reports for Fiercehealthcare on a new Kaiser Family Foundation (KFF) analysis finding that insurers offering Medicare Advantage plans had the highest gross margins. Medicare Advantage plans in 2023 realized nearly twice the gross margins from their Medicare Advantage enrollees as they did from their enrollees in the individual market. When will government stop wasting billions of taxpayer dollars and stop overpaying insurers offering Medicare Advantage?
According to KFF, insurers’ gross margins for each enrollee in Medicare Advantage in 2023 were $1,982 as compared to $1,048 in the individual market. While gross margins cannot be equated with profitability, they are a key metric for assessing a company’s financial performance. Gross margins do not account for administrative costs or taxes.
And, even though insurers suggested that more enrollees in their Medicare Advantage plans in 2023 received costly services than enrollees in 2022, their gross margins were about the same in 2023 as in 2022, $1,977.
The federal government theoretically caps the amount that insurers can profit through their Medicare Advantage plans. There is what is called a Medical Loss Ratio or MLR, which requires insurers to spend at least 85 percent of their government payment on care; they can keep as much as 15 percent for administrative costs and profits. But, in practice, the insurers have many ways to get around the cap.
UnitedHealth has done a brilliant job of getting around the cap by acquiring physician practices. It can transfer 85 percent of its government payment to its provider subsidiary and then claim it has met its medical loss ratio requirement.
Here’s more from Just Care:
- Medicare Advantage offers less care at greater cost
- Corporate health insurers generate sizeable profits covering people with Medicare and Medicaid. Why?
- For-profit hospitals urge CMS to hold Medicare Advantage plans to account for wrongful denials
- Public Citizen urges the Biden administration to keep profiteers out of health care, protect patients from corporate greed
- UnitedHealth Group profits by restricting people’s coverage
Leave a Reply