Report details how much insurers spend on care in California

The state medical society is pushing a bill that sets a minimum medical-loss ratio for health insurers.

By Emily Berry, AMNews staff. July 21, 2008.

A new report released by the California Medical Assn. reveals that during the last fiscal year, nine health plans in the state spent less than 85% of revenue on medical care for members, the minimum recommended in a bill the association supports.

This year's medical spending report for the fiscal year ending June 30, 2007, was the 15th the CMA has released listing the medical-loss ratio for the health plans regulated by the Knox-Keene Act, based on data collected by the state's Dept. of Managed Health Care.

Great-West Healthcare of California had the lowest medical-loss ratio, at 69.4%. Great-West was recently bought by Cigna, which had one of the highest medical-loss ratios at 94.3%.

WellPoint-owned Blue Cross of California (now known as Anthem Blue Cross) had the second-lowest medical-loss ratio at 79%, and Blue Shield was fifth lowest, at 82.1%.

Kaiser Foundation Health Plan had a ratio of 90.6%. L.A. Care Health Plan, a public health plan with fewer than 1 million members had the highest of any plan, with 97.1% of revenue going to care.

The medical association also calculated the additional medical spending that would have been created if the plans spent 85% of their revenue on care that year: more than $1 billion, with more than $933 million of it from California's two Blues plans.

California Medical Assn. President Richard Frankenstein, MD, a pulmonologist from Garden Grove, said health plans' medical spending ratios are revealing to more than just shareholders.