Readjustment of health plans – Economy

How a health plan works is similar to how car insurance works. At the base of both is mutualism, a common fund, constituted by the proportional contributions of each insured, with the objective of bearing the costs arising from covered events, provided for in the contract.

It is from the loan that the insurance company and the health plan operator withdraw the funds to pay for their operation. The biggest weight, of course, is the payment of expenses arising from the covered events. In most cases, they represent more than 50% of revenue, while commercial costs are around 20% and administrative costs, between 10% and 15%. As we still have the tax costs, it is clear that the industrial margin of an insurance company or a private health plan operator is small, and requires meticulous management to avoid negative results.

It’s true, these companies have one more important source of revenue. As they earn a lot from the sale of their products and are obliged to set up reserves to meet the needs of the operation, they are major financial investors, which generates significant resources that, added to the industrial result, generate a better operating result. Often, even the financial result is what guarantees the blue on the last line of the balance sheet.

The business of a health plan operator is subject to often uncontrollable variables, such as the covid-19 pandemic. But it’s not just negative situations that interfere with the result of the operation. In 2020, due to the pandemic, operators had a very positive average result, generated by the damming of millions of procedures, which were no longer performed due to the coronavirus, social isolation and the capacity of hospitals by people with covid-19.

This generated a demagogic action by the sector’s authorities, who forced low price adjustments, even knowing that, at some point, the dammed procedures would be carried out, concomitantly with the normal procedures in the routine of the plans, and that this would put pressure on expenses.

As it could not be otherwise, this happened, and private health plans faced a more complicated situation in 2021, precisely when the outbreak of the pandemic, added to low readjustments, generated an increase in expenses and a fall in billing.

Now, operators are announcing high increases to restore their capacity to act, rebalancing the mutual affected by the 2021 results. It is an unsympathetic measure, but necessary. In 2021, health plan operators paid BRL 200 billion to face more than a billion procedures. It’s more than the SUS budget and it’s how much the system actually costs.

The topic is serious. Operators cannot make indecent profits, but if the remuneration is not enough, they will not have the cash to serve the policyholders.

About Jenni Smith

She's our PC girl, so anything is up to her. She is also responsible for the videos of Play Crazy Game, as well as giving a leg in the news.

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