Targeting Health Insurance Companies Not the Answer to Healthcare Reform

The cost of insurance is merely a reflection of health care cost. Attacking health insurance companies misses the target.Insurance companies are in the business of spreading the risk of health care expenses across a large population of premium payers. To establish premiums' rates, insurance companies estimate how much a given population of employees will use in health care and then set the rates for a year based upon a formula that will allow for claims to be paid, company expenses to be paid -- and then a profit. Once the expenses for the year are tallied, they will then make adjustments, if needed, in the premiums for the following year. The health insurance model looks something like this:If the annual premiums for a group of people were $1,000,000, then the money from those premiums would be distributed as follows:Claims Paid: $850,000Administrative Costs: $90,000 (includes office lease, personnel, marketing, sales, commissions, taxes, etc.)Net Profit: $60,000Total:...(Read Full Article)