Obamacare is forcing insurers to devote more money to patient care and less on administrative costs and profits, a new analysis suggests.
Two briefs released Wednesday showed that insurers spent 92 percent of individual plan premiums on patient care or quality improvement last year. That left 8 percent for administrative costs or profits, according to the documents from the Robert Wood Johnson Foundation and the Urban Institute think tank.
Obamacare requires insurers to devote 80 percent of the money they get from premiums to medical care for patients and 20 percent to administrative costs. The goal is to keep insurers from not shortchanging patients.
The foundation said the current figures are a significant change.
Prior to Obamacare’s passage in 2010, insurers in 29 states failed to hit the 80 percent figure, the foundation said. Since last year, every state had an average of or above 80 percent.
Ten states spent an average of more than 100 percent of premiums on patients, which means insurers spent more on medical care than they brought in from premiums, the foundation noted.
But the downside is that premiums could rise in those states as insurers adjust to ensure they more closely hit the 80 percent threshold.
The data reflects only the individual market, which is for people who don’t get insurance through their job.
