FACT CHECK: PricewaterhouseCoopers' Study on Benefits and Administrative Costs
Posted by The Campaign on November 02, 2009 at 6:11 PM
According to the U.S. Government, Underlying Medical Costs and Premiums Track Directly Together
According to government data, health insurance premiums track directly with the underlying cost of medical care. As the cost of providing medical care increases, premiums rise accordingly. Some employers and families have chosen plans with lower premiums and higher cost-sharing (deductibles, co-pays, and coinsurance) to offset the increase in premiums.
Source: PricewaterhouseCoopers, A Shared Responsibility: Advancing Toward a More Accessible, Safe, and Affordable Health Care System for America, p.7
PwC Report Is Entirely In Line With Government Data
- In 2008, PwC released "The Factors Fueling Rising Health Care Costs 2008" which analyzed 2007 National Health Expenditure (NHE) data. The findings of this report relative to administrative costs and medical benefits paid are entirely consistent with the NHE data.
- PwC reported "About 87 percent of the costs of health insurance are benefits paid out. Administrative costs and profits account for the other 13 percent."
- According to NHE data taken from Table 12 of the National Health Expenditure data the net cost of private health insurance was 12.2 percent. (NOTE: CMS defines the net cost of private health insurance as "the difference between benefits and premiums. This difference includes administrative costs, and in some cases, additions to reserves, rate credits and dividends, premium taxes, and profits or losses and, is estimated separately for various types of insurers."
