Whether you receive your health coverage through your employer, or you purchase it directly from the insurer, you’re probably concerned about the rising cost of health care.
Premiums are on the rise, and further increases are expected. Understandably, Americans are wondering why healthcare costs are rising, and where their health insurance dollars are spent. As it turns out, the answer to rising healthcare costs is more complex than politicians make it out to be.
Every month, insured Americans (or their employers) send a check to health insurance companies to pay the premium on their insurance policy. But, as the image below demonstrates, only a few cents of that dollar remain with the insurance company…
About one-third of your insurance dollar goes to cover the cost of physicians’ services; another 35 cents covers inpatient and outpatient stays at the hospital. Pharmaceuticals account for 14 cents of the insurance dollar, and other medical services eat up five cents. That leaves 10 cents of every dollar to cover the insurance company’s administrative costs—such as claims processing and complying with government regulation–and three cents for profit.
