Some of the largest U.S. health insurers are changing their accounting practices to book administration costs as medical costs in an attempt to circumvent new industry reforms, according to a recent Senate panel’s report. Under the healthcare law passed in March, insurers must adjust their spending habits to meet new requirements. For example, large group plans must spend at least 85 cents of every premium dollar paid to them on actual medical care as opposed to administrative costs, while individual and small group plans must spend 80 cents.

A review of companies’ expenses for 2009 by the Senate Commerce Committee shows that in some markets, insurers are spending 74 cents per dollar on care on average.

Senate Commerce Committee Report (4/15/10)

Some Health Insurers Shifting Costs (Insurance Journal 4/19/10)

April 20, 2010