Insurers in the Obamacare marketplaces spent 75 percent of premiums on medical claims in this year's first quarter, an indication the market is stabilizing and insurers are regaining profitability, according to a Kaiser Family Foundation study released this week. By comparison, in the prior two years, insurers spent more than 85 percent of premiums on medical costs during the same period, which translated into huge losses.Insurers lose money when they spend 85 percent on medical costs? That means to me their administrative costs are 15 percent. I'm no expert on crop insurance, but I think USDA doesn't support 15 percent in administrative costs.
Did a quick google search and found this CBO analysis of a proposal:
"This option would reduce the federal government’s subsidy to 40 percent of the crop insurance premiums, on average. In addition, it would limit the federal reimbursement to crop insurance companies for administrative expenses to 9.25 percent of estimated premiums (or to an average of $915 million each year from 2015 through 2023) and limit the rate of return on investment for those companies to 12 percent each year.b [emphasis added]My personal opinion is that 9.25 percent is still too high, at least that FSA could administer an insurance program at less cost, given a reasonable time and resources to gain expertise.
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