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Kaiser Permanente Efficiency Keeps Prices Down

Efficiency has been a high priority for the Kaiser Health Plan, and it’s paid off in helping them to maintain affordable rates and increase market share.

When the Affordable Care Act was implemented, health insurance carriers were required to spend 80% of premiums on health care. That means only 20% is left for administration, advertisement, broker commissions, etc.

This was not a problem for Kaiser Permanente. They are the most efficient carrier in California when it comes to cutting health care costs. They accomplish this in several ways.

Health Management

In the fee-for-service world of Blue Cross and Blue Shield, the more you get sick, the more money the doctors make. With Covered California Kaiser plans it’s the opposite. They’ve set up the system in such a way that the healthier you stay, the more money they make.

So there’s incentive to keep you well, and as they say to help you to “thrive”. This incentive drives Kaiser Permanente to push its members to get their checkups, take their lab tests and do what needs to be done in order to stay healthy.

This keeps Kaiser members in good health, and it keeps costs down for the health plan.

Sophisticated Electronic Medical Records

Kaiser has one of the most advanced electronic medical records systems in the world. They keep great track of their patients, medical conditions, services rendered, medications taken, progress, and more.

This allows Kaiser Permanente to avoid wasting time, money and resources. Medicines and medical procedures are not over-prescribed because an insured’s team of physicians is all kept on the same page. 

California’s leading HMO reminds clients regularly when checkups, preventative tests and labs need to be done. And once those tests are done, the information immediately goes into this electronic medical records system.

Low Broker Commissions

When it comes to paying brokers, Kaiser Permanente has consistently paid less than pretty much any other carriers. This includes small business sales, and especially individual and family sales.

Until 2005, Kaiser wouldn’t even allow brokers to sell individual plans. Now, they pay out a $100 reward for each individual enrollment, with $50/year renewal after the first year. Many brokers are afraid they couldn’t survive if it wasn’t for the commissions they get paid by other carriers.