The medical cost ratio is the percentage of insurance premiums paid out to doctors, hospitals and other health care providers. Investors are upset about Aetna's rising ratio, because it leaves less room for profit. But even after the rise in the cost ratio, Aetna spends less than 80 cents of each dollar in health insurance premiums on actually providing medical care. The other 20 cents go into profits, marketing and administrative expenses.
Other private insurers have similar ratios. And here's the thing: most of those 20 cents spent on things other than medical care are unnecessary. Older Americans are covered by Medicare, which doesn't spend large sums on marketing and doesn't devote a lot of resources to screening out people likely to have high medical bills. As a result, Medicare manages to spend about 98 percent of its funds on actual medical care.
Many are opposed to the government getting involved in health care. But with an innovative plan we can reduce the waste and dedicate more $$$ to actual care as opposed to advertising and administrative overhead (identifying those "undesirables" from an insurance perspective)
A single payer system puts everyone in the same pool -- to share expenses. Isn't that what insurance is supposed to be about? Now, we have companies who compete not to provide you the best service, but compete to weed out folks likely to use a lot of services.