Americans deserve to know how their health care dollars are being used. America’s Health Insurance Plans (AHIP) has taken a closer look, analyzing data from 2016-2018 to understand where Americans’ health care premium dollars are being spent in the commercial market (employer-provided coverage and individual market). This analysis shows that 81.6 cents of every premium dollar goes directly to prescription drugs and medical services, with prescription drugs making up the biggest individual expense at 21.5 cents out of every dollar spent.
AHIP researchers analyzed premiums for typical commercial health insurance plans. Several changes were made from the 2018 analysis, such as presenting net prescription drug spending, including the impact of negotiated rates, and making the categories easier to understand.
Highlights from the research include:
- Medication and medical services accounted for 81.6 cents of the health care premium dollar.
- 21.5 cents are used to pay for prescription drugs.
- 19 cents are used to pay for in-patient hospital costs, while 19.8 cents are used to pay for out-patient hospital costs.
- 12.1 cents are used to pay for doctors’ visits.
- 4.6 cents are used to pay for federal, state, and local taxes.
- 2.4 cents are used to pay for the prevention of fraud, waste, and abuse.
- Only 3 cents of every health care dollar go toward health insurance provider profits.
“Every American deserves affordable, high-quality health care that provides them with real value and peace of mind. Health insurance providers invest health care premiums in pursuit of that goal,” said Matt Eyles, President and CEO of AHIP. “We are committed to negotiating lower prices with drug companies, doctors, and hospitals, which lead to lower premiums. Our mission is to provide Americans with the best possible care at the lowest possible price.”
The COVID-19 crisis has demonstrated that all Americans need affordable health care coverage. Reaching this goal means doing everything from reining in out-of-control prescription drug prices to taking on predatory private equity firms that price gouge patients with surprise medical bills. Health insurance providers remain committed to delivering affordable, high-quality coverage to every American.