Have you ever wondered how much of your premium dollar your health plan uses to provide medical care?
Do you want to know how much of your dollar goes toward administrative costs?
Are you curious how much of your dollar ends up as company profits?

Knox-Keene Expenditures Summary

Over the past seven years, consumers have come to rely on California Medical Association's annual Knox-Keene Expenditures Summary to find out how HMOs spend their health care premium dollars. Each year this ground-breaking survey "follows the money" and gives consumers and employers an additional source of information to consider when selecting a health plan for themselves or their employees.

The summary shows that in some cases HMOs spend less than 75 cents of each health care dollar on medical care, the balance going to administration and profits. In some for-profit plans, up to 25 cents of each dollar is spent on overhead costs, including large advertising budgets and multimillion dollar compensation packages for company executives. (The summary lists the salary and other compensations for executives at eight of the largest for-profit plans.)

The new summary also reveals an interesting trend: while managed care has been viewed as a way to make health care delivery more efficient, in California the rise of managed care has been accompanied by a gradual rise in non-medical and administrative expenses.

While consumers need to remember that many factors should be considered when choosing a health plan, the CMA hopes the information in this summary will help them make a better choice. "Our report offers one way for businesses and consumers to evaluate how their health care premiums are being spent," said Jack Lewin, M.D., Executive Vice-President and CEO of California Medical Association.

Data for the summary was gathered from reports filed by health plans with the California Department of Corporations, the U.S. Securities and Exchange Commission, and the annual reports published by the plans themselves. Also included in the summary is information on specific plan operations, such as the number of physicians and hospitals under contract by each plan and a geographic breakdown of where each plan is available.

"Until better ways to measure quality of care become available, this summary is one of the few methods to assess a health plan's performance," Dr. Lewin said.

To obtain a copy of the California Medical Association's latest Knox-Keene Expenditures Summary for FY 1999-2000, or for past years' summaries, please contact the CMA's Sacramento office at (916) 444-5532.