Private Health Insurance Providers Pay Over Twice What Medicare Pays



RAND Corporation recently released a report on medical spending in 2020 by which they found that personal insurance firms 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 actually doesn’t appear fair to insurance providers, who then pass those higher payments to customers in the shape of increased premiums, there isn’t a simple solution.

Negotiating for Lower Agreed Payments

It could seem that the answer can be for medical insurance providers to barter lower payments for services with healthcare providers and hospital systems. Nevertheless it’s not that easy because providers and hospitals rely upon the high payments they get from insurance firms.

One other seemingly potential solution is Medicare for all, but hospitals would close down or find it unattainable to search out staffing in the event that they lost their revenue from private insurers.

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

So, insurance providers can’t look forward to finding allies in medical providers if they fight to lower their payments to Medicare levels.

Health Insurance Providers Partnering With Large Employers

In line with, 56% of employers offer group medical insurance, so perhaps insurance providers can work with lobbying groups from the massive corporations they insure to assist negotiate lower accepted reimbursement from hospitals and health systems, enabling insurance providers to lower premiums.

Private corporations would profit from negotiating lower premiums because their advantages package would grow to be more attractive to employees. As well as, in the event that they complement worker premiums, their contributions would decrease. And it will 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 many years. But this information should give insurance providers the statistics they should negotiate lower reimbursement agreements.


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