Private Health Insurance Providers Pay Over Twice What Medicare Pays

 

RAND Corporation recently released a report on medical spending in 2020 in which they found that private insurance companies paid, on average, 224% of what Medicare would have paid.

The discrepancy varied from 175% in Arkansas, Hawaii, and Washington to 310% in Florida, South Carolina, and West Virginia. And while this certainly doesn’t appear fair to insurance providers, who then pass those higher payments to customers in the form of increased premiums, there isn’t an easy solution.

Negotiating for Lower Agreed Payments

It may seem that the solution would be for health insurance providers to negotiate lower payments for services with healthcare providers and hospital systems. But it’s not that easy because providers and hospitals depend on the high payments they get from insurance companies.

Another seemingly potential solution is Medicare for all, but hospitals would close down or find it impossible to find staffing if they lost their revenue from private insurers.

The Kaiser Family Foundation calculated that “limiting private insurance reimbursement to Medicare rates would reduce health spending by about $350 billion in 2021.” And while that looks good for insurance companies, it doesn’t look for hospitals and care providers.

So, insurance providers can’t expect to find allies in medical providers if they try to lower their payments to Medicare levels.

Health Insurance Providers Partnering With Large Employers

According to Clearsurance.com, 56% of employers offer group health insurance, so perhaps insurance providers can work with lobbying groups from the large companies they insure to help negotiate lower accepted reimbursement from hospitals and health systems, enabling insurance providers to lower premiums.

Private companies would benefit from negotiating lower premiums because their benefits package would become more attractive to employees. In addition, if they supplement employee premiums, their contributions would decrease. And it would be a win for insurance providers because their claims payments to hospitals and medical providers would decrease.

It’s obvious that there’s no easy answer because politicians, consumer advocacy groups, and insurance providers have been arguing over healthcare solutions for decades. But this information should give insurance providers the statistics they need to negotiate lower reimbursement agreements.

 

Melanie Musson is a health insurance expert with Clearsurance.com.

Follow us on social media for the latest updates in B2B!

Latest

Full Circle Healthcare: Information Blocking, Interoperability, and Health Data
August 11, 2022
 As the world becomes more digital, there are certain protections in place to help ease the accessibility of health information for each patient. Speaking on the topic of information blocking, Nicki Read more
Tornado Chasers by Dynamic Attractions
How Technology has Empowered the Theme Park and Attractions Industry with Michael Carroll of Dynamic Attractions
August 11, 2022
Watch below as Michael Carroll of Dynamic Attractions joins Pro AV Today host Ben Thomas to discuss some of the ways that technology is empowering and enabling the modern attractions Read more
The Most Important Challenges Faced by the Hotel Industry
August 11, 2022
One of the most affected industries drastically changed by the COVID-19 pandemic is the hospitality industry. While the lifting of restrictions has helped the industry bounce back in some ways, there Read more