What kind of business are practitioners, health care (HC) organizations, or including HC insurance companies in when they are spending too little of insurance premiums on actual health care?
The concept of the Medical Loss Ratio—the percentage of the premium dollars collected by the insurance company's that are actually spent on health care—helps explain how insurance companies are using you as their financial engine and what their priorities are.
The "health insurance industry says its average MLR is 87%," but, according to Senate research, it's significantly lower.
As stated in the Consumer Watchdog, Dec. 24, 2009, "The Senate bill's requirement that insurers spend 80% or 85% of the premiums they collect on health care services will—absent strict rate regulation—perversely encourage insurers to raise their premium rates. In the same way that a Hollywood agent who gets a 20% cut of an actor's salary has an incentive to seek the highest salary, insurers will have incentive to increase health care costs and raise premiums so that their 20% cut is a larger dollar amount."