Managed Care Outlook

This year, more of the premium dollar goes to medical care


Experts caution that it may not indicate a sustained trend. But for what it's worth, as 1996 dawned, the nation's publicly traded HMOs were spending more of their premium dollar on medical care and less on administration than they had been spending a year earlier. That's the import of data on "medical loss ratios," the proportion of total medical expenses to total revenue, for 21 of the 22 publicly traded plans; figures weren't available for the remaining HMO. Also, the once-hot HMO sector has turned in a much weaker performance so far this year than the stock market as a whole.

Mean medical loss ratios at year-end, 1993, 1994 and 1995
Median medical loss ratios at year-end, 1993, 1994 and 1995

SOURCE: Pulse Newsletter,SHERLOCK CO., GWYNEDD, PA.

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