Here’s Where Your Health Care Dollars Go

Julia Cohen | Contributor

Amidst rising health care costs, a report from America’s Health Insurance Plans (AHIP) and research firm Milliman breaks down how the percentage of each insurance premium dollar is spent.

The data, taken from 2014 to 2016, covers premiums paid in traditional, commercial health insurance plans. These are the ones that customers get through their job or buy on the individual market. (RELATED: Number Of Uninsured American’s Didn’t Change In Trump’s First Year)

Prescription drugs take up the largest chunk of premiums, coming in at 23.2 percent. With rising prescription drug prices, this number may drive premium increases in the future.

The next largest amount goes to paying doctors and the cost of maintaining their offices and staff, 22.2 percent and 20.2 percent, respectively. Covering the price of a hospital stay takes up 16.1 percent, according to the report. Taxes take up 4.7 percent of a premium dollar, though this may change as companies adjust for lower tax burdens under GOP tax reform.

Some of the lowest percentages are customer engagement, like advertising, at 1.8 percent and company profit at 2.3 percent.

As expected, prescriptions, hospital stays, and doctor’s visits will contribute the most to premium increases. “We need to come together  to find new ways to provide people with the care they need at prices they can afford,” Matt Eyles, incoming president and CEO of AHIP, stated in the Tuesday press release.

Several other factors may increase health insurance premiums as well. The repeal of the individual mandate is projected to increase premiums by 10 percent per year, according to the Congressional Budget Office. This is due to healthy payers opting out of the health insurance market.

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