Insurers’ Revenue From Premiums Increased by 7% in 2009, NAIC Says
U.S. health insurers in 2009 collected 7% more revenue from premiums for individual, group and other policies than in 2008, despite having fewer policyholders, according to a National Association of Insurance Commissioners report released Thursday, Reuters reports.
After analyzing annual company financial filings -- which were not submitted by every private insurance carrier -- NAIC found that the number of individuals with insurance decreased by 7% in 2009. However, insurers' individual premium revenues increased by 15% in 2009, while group premiums rose by about 3%, as the companies hiked rates.
The organization also found that the percentage of premiums spent on medical costs -- known as the medical-loss ratio -- increased to 84.1% in 2009, up from 83.2% the year prior (Krauskopf, Reuters, 9/16).
Under the federal health reform law, beginning Jan. 1, 2011, large group health plans must spend at least 85% of premiums on medical services and quality improvement, rather than on administrative costs or profits. The MLR for individual and small-group health plans must be at least 80% (California Healthline, 8/13).
Reasons for Increase
According to NAIC Chair Sandy Praeger, premiums likely increased because the risk pool during the recession has comprised higher-risk individuals, while healthy and young workers who have been laid off typically refrain from purchasing plans.
Praeger also noted that insurers could have been bulking up their reserves last year in anticipation of a widespread H1N1 flu pandemic the never manifested (Reuters, 9/16).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.