FOR IMMEDIATE RELEASE:

Most Vermont residents surveyed believed that only half of private health insurance premium dollars (50-percent) pay for health care used by members, and that insurers keep more than 40 percent of premiums as profit.

The survey of more than 400 Vermont residents conducted by Macro International of Burlington, Vt., also attempted to gauge Vermonter residents' awareness of the actual cost of prescription drugs and health care services such as physician office visits as compared with the out-of-pocket cost of health insurance copayments. A majority of residents were unable to correctly estimate the true cost of the physical examination ($107 on average), but did correctly estimate ate that a one-month supply of Lipitor® costs on average $110.

Vermonters' perceptions of health insurers' finances are in sharp contract to the facts. According to not-for-profit health insurers' filings with the Banking Insurance Securities and Healthcare Administration, 85 to 90 percent of premiums are paid out in the forms of claims filed by hospitals, doctors, pharmacies and other health care providers on behalf of their members. Less than 5 percent of premiums go to these insurers' reserve funds (the not-for-profit equivalent of typical business "profit").

"At a time when health care costs are rising, and the current private health insurance system is under scrutiny in Vermont, these survey results tell me that many Vermonters don't understand the current system, said Jim Hester, MVP Vermont vice president. "This makes it very difficult for them to accurately assess the competing proposals for reform," he said.

Hester cites the proposal to fund health care for the uninsured by imposing a 3-percent premium tax on all health insurers as an example.

"Some have argued that health insurance companies like MVP could absorb this tax without passing it along to their customers, Hester said. "While the perception in our survey of large profits of 40 percent would support this idea, the reality is that a 3-percent tax would be greater than our projected surplus in the state of Vermont for 2005, and MVP would certainly have to pass any such tax along to our fully insured customers, who are primarily small employers.

Hester also warned that the inaccurate public perception of health insurers' actual profits, "gives false credibility to the deeply flawed proposal to fund a single-payer health insurance system by slashing administrative costs."

"The survey results clearly demonstrate that most Vermont residents don't understand the direct relationship between their private health insurance premiums and the cost of health care in the state of Vermont. The way for Vermont to reduce health insurance premiums is for providers, employers, insurers and government to work together to find ways to reduce the cost of care," Hester said.

ORC Macro International, of Burlington, Vt., conducted the poll of more than 400 Vermont residents for MVP Health Care in April.