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Commonwealth Fund: Insurer Spending on Quality Improvements Averages $29 Per Customer

By CQ Staff

March 22, 2013 -- A Commonwealth Fund report issued last week said that health insurance companies spent an average of $29 per plan enrollee on direct quality improvements in 2011.

The report by Mark Hall of Wake Forest University and Michael McCue of Virginia Commonwealth University said that amounted to less than 1 percent of the premiums that were collected from policyholders.

The health care law pushes insurers to spend less on administrative expenses and profits and more on activities that directly benefit consumers. Under the law (PL 111-148, PL 111-152), large insurers must spend at least 85 percent of the premiums they collect on medical claims and quality improvements or else pay rebates to their customers. Small insurers must spend at least 80 percent.

Quality improvement is defined as improving health outcomes, preventing hospital readmissions, improving patient safety and reducing medical errors.

The report found that there was a range in such expenditures, with some insurers devoting $40 per plan enrollee to quality improvement and some as little as $12.

"These data can provide insurers with helpful insights into how the industry is approaching quality improvement," said Sara Collins, a Commonwealth Fund vice president, in a statement. "The hope is that insurers will take the information and use it to determine if they are making an appropriate investment in improving quality and, ultimately, their members' health and well-being."

Data for the Commonwealth Fund study was obtained from forms filed by insurers with the Centers for Medicare and Medicaid Services.

  • Commonwealth Fund Report
  • Publication Details