ABSTRACT
The American health system is the most expensive in the world. 1 It is also one of the most inequitable. Hospitals in major metropolitan areas are gleaming cathedrals of technology. But by some very meaningful measures, the American health system itself is sick, lagging behind far less developed countries. According to a frequently cited World Health Organization study, a baby born in Bosnia has a longer life expectancy than one born in the United States of America. The citizens of Bangladesh have more equitable access to health care than their American counterparts. The United States ranks 47th in life expectancy at birth and 54th in fairness, a measure of the extent to which the best care is available equally throughout a country (WHO 2000). Nearly 51 million Americans have no health care coverage, and, according to the Commonwealth Fund, an additional 25 million are considered underinsured. Many in low-paying jobs have only the illusion of health care coverage (DeNavas-Walt et al. 2010). The number of uninsured and underinsured Americans has grown larger as for-profit corporations have come to dominate the health insurance industry. At the same time, the percentage of premiums that insurers spend paying claims, reflected by an equation called the medical loss ratio (MLR), has steadily declined. The higher the MLR, the more the insurer has paid out in claims. From 1993 to 2010, the average MLR, which is a key measure that investors consider in evaluating an insurer’s financial performance, dropped from 95 percent to around 80 percent. Investors prefer to see a decreasing MLR every quarter, and if they don’t, their displeasure can be reflected in a decrease in the company’s stock price.
