You know that $100+ premium you pay each month to ensure you have health insurance? Or maybe it’s more like $500+? For the really unlucky, it could even be $1,000+!
Turns out, only a percentage of that money actually goes to your medical care. (Shocked? Not us.) But some organizations, like America’s Health Insurance Plans (AHIP), try to obscure this fact using their “dollar bill” breakdown.
It looks like the political advocacy and trade association for health insurance companies is at it again, trying to make bajillion-dollar payor profits look . . . reasonable. AHIP’s 2022 report “Where Does Your Health Care Dollar Go?” features a “playful” infographic of a dollar bill and breaks down, by pennies, just how your money is spent. A bit oversimplified, if you ask us.
According to the 2021 report, 3 cents of every consumer premium dollar go toward an insurer’s profit. Between 2021 and 2022, insurers profited an additional .6 cents, making it 3.6 cents per dollar. And while that doesn’t sound like a whole lot, might we remind you that premiums don’t just cost a dollar or make up the entire dollar when looking at the full healthcare echo system.
According to the infographic, health insurers keep around 17.5 cents of every dollar for non-medical costs. Their profits of 3.6 represents 20% of that portion. What’s even more interesting is that every dollar of an insurer’s profit goes toward the entity that doesn’t care for patients. Is it just us or, how right is it that 3.6 cents of the entire health care ecosystem is used for profits . . . for the only sector that is not focused on care or life-saving drugs?
Premiums cost patients thousands of dollars per year — and millions of people pay them.
Let’s break it down:
For your basic Bronze ACA health plan, the average monthly premium is $928, according to Forbes. Multiply that by 12 months, and the average consumer is paying $11,136 per year — just on premiums. (Not to mention the fact that most consumers, in addition to premiums, have to fork out copays and deductibles, among other health expenses.) But take $11,136 and multiply it by every single person who has a Bronze ACA health plan . . . and a mere 3.06 cents turns out to be worth a whole lot more.
This dollar analogy is a nice misdirection, but we don’t pay for insurance with Monopoly money. Though AHIP’s graphic appears to help consumers, it’s a sneaky tactic to mask the “true drivers of medical inflation” while ignoring the part insurance companies play in the equation.
If we had a dollar for every time an insurer blamed inflation, we’d be sitting as pretty as they are right now.
It’s interesting, too, that healthcare service costs are basically flat. Despite massive inflation, hospital outpatient, ER visits, and other patient expenses have seen very small increases, at 4%. Meanwhile, insurance prices are up by nearly 14%.
And even though the entire country is facing higher prices, hospitals are facing seriously high labor and supply costs while insurers are manipulating their dollars to squeeze out as much profit as possible — all while patients suffer.