Robbing Peter to Pay Paul... High #Employer Healthcare Costs Closely Linked to #MedicareAdvantage.
Employer-Sponsored Health Insurance rates paid to hospitals are 200-500% of Medicare rates for the same services.
However, Medicare Advantage rates (through the same insurance companies as the Employer-Sponsored Health Insurance plans) are about 95 - 105% of Medicare rates.
Why is there such a large difference?
1. Health Insurance Carriers and Hospital Systems negotiate for Total Contract Value. Therefore, insurance carriers convince hospital systems to accept low Medicare Advantage rates in exchange for giving in to much higher Employer-Sponsored Health Insurance rates.
2. Health Insurance Carriers desire much higher profit margins on Medicare Advantage members. In fact, Employer-Sponsored Health Insurance margins are only $745/member/year, whereas Medicare Advantage margins are $1,730/member/year... more than DOUBLE.
3. Employer-Sponsored Health Insurance membership is largely stagnant, while Medicare Advantage membership is growing rapidly. It has increased from 15 million to 33 million members in the past 10 years.
4. Most Employer-Sponsored Health Insurance members are on Self-Funded plans (65%), so the Health Insurance Companies are not bearing most of the risk on the higher-costing claims... Self-funded employers and their employees are.
Implication: Direct Contracts between employers and hospitals and ASCs can achieve better rates than Health Insurance Companies because these direct negotiations are not 'muddied' by Medicare Advantage.
Sources at AHealthcareZ YouTube Channel.
#HealthcareCosts #Healthcare #HealthInsurance #EmployeeBenefits #Medicare #Hospitals
Employer-Sponsored Health Insurance rates paid to hospitals are 200-500% of Medicare rates for the same services.
However, Medicare Advantage rates (through the same insurance companies as the Employer-Sponsored Health Insurance plans) are about 95 - 105% of Medicare rates.
Why is there such a large difference?
1. Health Insurance Carriers and Hospital Systems negotiate for Total Contract Value. Therefore, insurance carriers convince hospital systems to accept low Medicare Advantage rates in exchange for giving in to much higher Employer-Sponsored Health Insurance rates.
2. Health Insurance Carriers desire much higher profit margins on Medicare Advantage members. In fact, Employer-Sponsored Health Insurance margins are only $745/member/year, whereas Medicare Advantage margins are $1,730/member/year... more than DOUBLE.
3. Employer-Sponsored Health Insurance membership is largely stagnant, while Medicare Advantage membership is growing rapidly. It has increased from 15 million to 33 million members in the past 10 years.
4. Most Employer-Sponsored Health Insurance members are on Self-Funded plans (65%), so the Health Insurance Companies are not bearing most of the risk on the higher-costing claims... Self-funded employers and their employees are.
Implication: Direct Contracts between employers and hospitals and ASCs can achieve better rates than Health Insurance Companies because these direct negotiations are not 'muddied' by Medicare Advantage.
Sources at AHealthcareZ YouTube Channel.
#HealthcareCosts #Healthcare #HealthInsurance #EmployeeBenefits #Medicare #Hospitals