by David Himmelstein, MD
Posted by CommonHealth
WBUR 90.9
Friday, October 5th, 2007
The Ontario Health Insurance Plan (OHIP), which covers about 12 million residents of that Canadian province, employs roughly 1500 people. The Connector has 35.6 FTEs. It helps arrange coverage for the 30,000 people with private insurance purchased through the Commonwealth Choice program; 23,000 who get partially subsidized coverage under Commonwealth Care; and 92,000 low income individuals signed up for free insurance. That’s a total of 145,000 people. In other words, the Connector employs twice as many (2.5) people per 10,000 enrollees as OHIP (1.2).
That comparison doesn’t sound too bad, until you realize that OHIP actually pays all of the bills for care in Ontario and administers virtually the entire health care financing system. The Connector merely serves as a glorified insurance broker, signing people up for coverage with plans like Blue Cross and Harvard Pilgrim. So on top of the 4% to 5% cut of every premium dollar that the Connector takes, Blue Cross and Harvard Pilgrim take their 15%. (I can’t tell you what Tufts’ share is — their annual report for 2006 left out the figures — though it does let slip that its net worth rose by $96 million even as enrollment fell).
In total we paid more than $800 million for health insurance companies’ overhead last year – $20 million to the Connector (about $145 per person they helped find coverage) $251 million to Blue Cross, $332 million to Harvard Pilgrim, and (my estimate) about $200 million to Tufts. And this figure doesn’t include the overhead of the dozens of smaller insurance plans in our state. If OHIP had been on the job the cost would have been about $75 million — less than one tenth as much.
A few other figures to remember on this first birthday of health reform. According to the U.S. Census Bureau, in 2006 there were 469,733 uninsured residents of Massachusetts with family incomes above $150% of poverty. The Connector says that it now covers 23,083 of them under Commonwealth Care and has enrolled another 30,000 private plans. That’s 11% of the total.
David Himmelstein is an Associate professor of medicine at Harvard Medical School and Co-founder of Physicians for a National Health Program