United Health Care

[EdmondDantes_]

7. The medical loss ratio is 80/20 after the ACA

80% of premiums have to be spent on health care costs or quality of care. The remaining 20% can be spent on administration, overhead, marketing and profit. For insurance companies selling to large groups (50+ people) it's 85/15.

So realistically the cost drivers of insurance are pharmacy costs and reimbursement for use. Specifically GLP-1 for weight loss is a major driver. Here in Massachusetts where all health insurance companies are non profit, Blue Cross isn't going to be including GLP-1 for weight loss because they were on track to be paying a billion dollars a year by 2026. In 2023 they spent 75 million, 2024 200 million. That's for weight loss, not diabetes. In 2024 Blue Cross in Massachusetts lost 400 million dollars and that's after accounting for 175 million in investment income. So that's not a sustainable model without dramatic increases in premiums. Oh and because health insurance companies in Massachusetts are nonprofit they are required to meet a medical loss ratio of a minimum of 85/15 for large groups and 90/10 for small groups and individuals. So the idea that it's just greedy profit seeking insurers doesn't actually hold up.