What Happens to the Rest of My Monthly Payment?

Your monthly health care insurance premiums go toward many aspects of health care. Your premium payment — along with those of other members — all go into a pool of funds used  to pay hospitals, doctors, drug companies and for other health care services.

Does Any of My Monthly Payment Go to Investors in the Company?

Actually, no. Blue Cross and Blue Shield of Montana is not owned by investors. It’s owned by our members. Our business model means profits go back into the business. This lets us focus on finding innovative ways to make the health care system work better while curbing health care costs.

What Happens to the Rest of My Monthly Payment?

The rest of your premium helps process health care claims, provide customer service to our members and offer programs that encourage people to stay well. Some also goes to the health insurer’s profit margin. If an insurer is a public company, the profit margin pays stockholders, among other things. For a non-investor-owned company like Blue Cross and Blue Shield of Illinois, the profit margins are smaller, but a large part is used to fund company growth and better member services.

Where Does Every Dollar Go?

Here’s a breakout of where your health care premiums go:  

• Hospitals get 42 cents of every dollar
• Doctors get 12 cents of every dollar
• Drug costs get 22 cents of every dollar
• Other health care services get 6 cents of every dollar
• All other expenses get the final 15 cents of every dollar
• Profit is 3 cents of every dollar

Keep in mind, any time more money is going out to pay for people’s health care than coming in, adjustments are made so the insurer can stay in business and serve you. The health insurance company adjusts payments based on financials from the past year. That means payments for health care services to providers may change from year to year. As a result, our customers may see changes in their premiums from one year to the next.

Insurers are always working with doctors, hospitals and drug companies, along with other health care providers, to cut costs without sacrificing quality.

In the end, your monthly health insurance payment does just that. It helps pay for your care, in sickness and health, every single year.

Want to know more? Read more about Health Care Payments.

Source: Where Does Your Health Care Dollar Go?  American's Health Insurance Plans (AHIP), 2022

Originally published 7/5/2016; Revised 2022, 2024