A significant portion of health insurance premiums go not for actual medical care but for private jets, generous CEO salaries and underwriters who decide when to drop patients who become too expensive, according to a Senate committee report.
Sen. John D. Rockefeller, D-W.Va., chairman of the Senate Committee on Commerce, Science and Transportation, wrote to 15 of the biggest health insurance companies in August, asking them to provide information on how much of policyholders' monthly premiums was spent on medical care versus the amount that went to administrative costs and company earnings.
Such figures are known in insurance industry-speak as "medical loss ratios." But when insurance companies balked, saying the information was confidential and proprietary, Rockefeller's investigators went digging through public documents and found that much of policyholder premiums was going to nonmedical costs.
The insurance industry has long pointed to federal data that says about 87 percent of every dollar that people spend on premiums goes toward actual medical care, but Rockefeller's investigators found the average for the top six insurance companies is closer to 82 cents on the dollar for medical care.
That five-point difference represents billions of dollars.
And when investigators broke down the information by insurance type, they found that people who buy individual insurance from those companies rather than being part of a small or large business, get the least bang for their buck.
On average just 74 cents of every premium dollar for individual coverage goes to medical care.
Coventry Health Care had the lowest figure at 66 cents.
Rockefeller contends that consumers get more information from window stickers on new cars for sale than they do from insurance companies.
"Instead of disclosing medical loss ratios to help consumers and small business owners make informed health care choices, health insurance companies have hidden them behind a wall of corporate secrecy," he wrote, adding that the committee found Cigna appeared to have submitted inaccurate state insurance regulatory filings for its activities in certain areas.
None of this surprises Wendell Potter.
He is a former Cigna insurance company executive turned whistle-blower and has testified before the committee about industry practices.
Potter has long said that insurers spend less than they claim on medical care and spend a big chunk of money to actively seek ways to avoid paying claims.
Rockefeller's letter also said a large portion of money consumers pay for premiums is spent on analyzing claims.
According to Potter, companies will carefully review an individual's policy to see if the insured has omitted a minor illness or pre-existing condition, and will use that as a justification for cancellation.
In an interview with ABC News Monday, Potter said insurance companies drop consumers who cost too much -- "to get rid of any individuals or customers that might cost more money than they take in in premiums."