Health Care Costs Series: What Happens to the Rest of My Monthly Payment?

Health Care Costs Series: What Happens to the Rest of My Monthly Payment?

In our effort to keep you fully informed on how your money is spent to cover your health care, we want to let you know more about the cost of your care. This Cost of Care series is dedicated to helping you to make sense of where your premiums go, so you can feel confident in your investment in your health. We hope this Q&A will make things easier to understand. If something isn’t clear, or you’d like to hear more, let us know! You can ask a question in the comments or private message us.

In the last article, we talked about how a portion of your monthly payment for your health insurance, or premium, goes to pay hospitals, doctors, drug companies and other health care services. Your monthly premium goes into a pool paid by you and other members, which pays the bills for all members.

Doesn’t my monthly payment go to investors in the company?

Actually, no! Blue Cross and Blue Shield of Montana is not owned by investors, but by our members. This business model means our profits go back into the business. This lets us focus on finding innovative ways to make the health care system work that mean improved care and more control over health care costs.

Keep in mind, any time more money is going out to pay for people’s health care than is coming in through members’ monthly payments, adjustments are made so the insurer can stay in business and serve you. The health insurance company adjusts payments based on their previous year’s financials. That means payments for health care services to providers may vary from year to year. As a result, our customers see the effects in their premiums from one year to the next. Insurers are constantly working with doctors, hospitals and drug companies, along with other health care providers, to reduce costs in any way possible without sacrificing quality care.

What happens to the rest of my monthly payment?

The rest of your premium goes to processing health care claims, providing customer service to help members, and offering programs to help people stay well. A share also goes to the insurer’s profit margin. If an insurer is a public company, the profit margin pays their stockholders, among other things. For a non-investor owned company like Blue Cross and Blue Shield of Montana, the profit margins are smaller and a large part is used to grow the company to offer you better services in the future.

Where does every dollar go?

To summarize, for every dollar you spend 90 cents goes directly to your care and the other 10 cents goes to operating services.

  • Drug costs get 15 cents of every dollar
  • Doctors get 26 cents of every dollar
  • Hospitals get 38 cents of every dollar
  • Other health care services get 11 cents of every dollar
  • All other related expenses get the final 10 cents of every dollar

In the end, your monthly health insurance payment does just that. It helps pay for taking care of you and helps provide you with quality service, in sickness and in health, every single year.

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