In its 10th annual report comparing the spending of California health plans, the California Medical Association identified Blue Cross, Cigna Healthcare, Health Net and Blue Shield as the companies who spent the lowest percentage of their revenues on patient care.
Blue Cross of California, with more than 4 million enrollees, spent 78.9% of its revenue on medical care in 2001-2002, according to the Knox-Keene Health Plan Expenditures Report, released this week by the CMA.
Plans with the highest medical loss ratios were the 6 million-member Kaiser Foundation Health Plan, with 94.9%, Aetna, Cal Optima and Sharp.
The companies whose patient care spending are reported include:
- Cigna Healthcare of California, 82.7%
- Blue Shield of California, 85.4%
- Health Net, 87%
- Cal Optima, 92.5%
- Aetna U.S. Healthcare of California, 93.3%
- Sharp, 94.8%
"Bear in mind, this is only one kind of comparison for patients to use when judging a health plan," said CMA CEO Jack Lewin, M.D., in a release. "You need to look at size, convenience for you and your family, copayments, overall premium costs and benefits packages. Still, these differences in administration and profit levels are disturbing, considering how fast insurance premiums are rising."
But Bobby Pena, a spokesperson for the California Association of Health Plans, says the report fails to differentiate between network-based and staff-model health plans.
"A staff model that owns its hospitals and runs its medical groups has a lot of things it can mark under medical costs that other network-based health plans have to mark under administrative costs," Pena says. "A staff model plan will always look better on those kinds of numbers."
Pena says the burden of health plan administration has grown in recent years as a result of additional legislation and regulations for managed care. He also takes issue with the report's suggestion that administrative spending is wasteful.
"Say a network-based plan has disease management or case management programs that help members with diabetes. It has some statisticians and number crunchers, but it also has nurses calling patients to see if they're using a glucometer or taking their medications appropriately. That all goes down as administration," Pena says.
"If you ask patient with diabetes, that's a pretty important medical role for someone to play, and it is far from a needless administrative function."