CMA Releases 11th Annual Health Plan Expenditures Report
[Posted 04/15/04]

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CMA this week released its 11th annual “Knox-Keene Health Plan Expenditures Summary,” detailing the financial status of California’s HMOs. This year’s report shows that in 2002-2003, Blue Cross of California continued to spend less than 80 percent of each premium dollar on medical care. Just 78.9 percent of its revenue goes to caring for patients. The rest of the revenue went to administrative costs and profit.

Blue Cross is the only large health plan that has consistently spent less than 80 percent of revenues on medical care since CMA issued its first report in 1994. In this year’s survey, Blue Cross also registered the highest executive compensation among publicly traded health plans, with CEO Leonard Schaeffer receiving more than $7 million in stock, salary, and other compensation in 2002.

“These figures for administrative costs and profit levels are quite astonishing when you consider how much premium costs to patients keeping rising,” said CMA President Robert Hertzka, M.D.

Other plans that spend the least money on medical care are CIGNA HealthCare of California (84.2 percent) and Blue Shield (82.6 percent). In what has proven to be an embarrassment to the insurance industry, they refer to the percentages as the “medical loss ratio.”

Plans with the highest “medical-loss ratios"—those spending the most on medical care—are Kaiser Foundation Health Plan (98.3 percent), Scripps Clinic Health Plan Services (95.8 %), and Sharp (94.8 percent). Other large plans, such as Aetna Health Care of California, Health Net of California and PacifiCare of California, held the midline on their ratios, with Aetna spending 85.2 percent, Health Net spending 85.6 percent and PacifiCare, 88 percent.

CMA’s report is a compilation of data reported by managed care plans to California’s Department of Managed Health Care, and by publicly traded plans with the U.S. Securities and Exchange Commission.

While DMHC regulates health plans and their reporting of expenditures, it does not publish this data, as CMA believes it should. CMA continues to compile this data and publishes it annually.

“We do recognize that all health plans are not alike,” says Dr. Hertzka. “This is just one kind of comparison for the public to use when considering and judging a health plan. You also need to look at convenience for you and your family, access to physicians, hospitals and other health care needs, as well as copayments, overall costs, and benefit packages.”

Click here to download a copy of the report.

Contact: CMA Government Relations, 916/444-5532.