Health Insurance Dollar Deconstructed

When we pay our health insurance premium, what exactly are we paying for? In December 2008, Price Waterhouse Coopers prepared a cost study report for America’s Health Insurance Plans (AHIP)—the umbrella association for 1,300 health insurers across the United States—to illuminate the causes of the rising costs of health care. From that report, AHIP broke down the health insurance dollar. For each dollar paid for health insurance:

$0.33 – physician services
$0.20 – inpatient costs
$0.15 – outpatient costs
$0.14 – drugs
$0.05 – other medical costs
$0.87 goes towards services
$0.06 – government payments, compliance, claims processing and other administrative costs
$0.04 – consumer services, provider service and marketing
$0.03 – insurer profit
$0.13 goes towards administrative costs
Source: Americas Health Insurance Plans