Foundation Analyzes Insurer Spending on Quality

Health insurance companies devoted an average of less than one percent of premiums to formal quality improvement (QI) activities in 2011, according to a report issued in March by the New York City-based Commonwealth Fund.

The Fund indicates that the industry spent $2.3 billion on QI in 2010—with an average expense of $29 per subscriber. The five major QI categories were health information technology (representing 17% of total QI expenses), improving outcomes (51%), reducing hospital readmissions (9%), patient safety (10%) and wellness (13%). Under the Affordable Care Act, insurers must spend at least 80 to 85% of premiums on medical claims and quality improvement or pay rebates to customers. Commonwealth found that non-profit health plans tended to spend a higher proportion of funds on QI than did for-profit plans.

To review the report, Insurers’ Medical Loss Ratios and Quality Improvement Spending in 2011, visit Commonwealth’s website at www.commonwealthfund.org.