They spend 83% of premiums on medical care.
(they list both numbers on page 9 of http://www.unitedhealthgroup.com/~/media/CEBA762A544B44D19F1... )
Some of the 17% represents necessary administrative costs. Who knows how much.
(they list both numbers on page 9 of http://www.unitedhealthgroup.com/~/media/CEBA762A544B44D19F1... )
Some of the 17% represents necessary administrative costs. Who knows how much.
Imagine if there existed a company whose only job was to buy oil from OPEC and deliver it somewhere else. They could say "we spend 99% of our revenue on oil! look at how efficient we are!", ignoring the fact that OPEC is a cartel that sets prices, so not only can they be vastly overpaying, but the amount of oil purchased can be wildly inadequate to cover the needs.
In contrast, the Medicare program spends less than 2% of its budget on administrative costs.
In a functioning market they would face competition for customers and try to lower premiums (and so try to lower costs). In our system they seem to look at provider prices in a region and decide if they can profit there or not (and in the case of non profits, if they can operate without losing money).