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The biggest questions surround the cost of care. That’s why we’re dedicated to making sure the cost for your coverage is transparent. Knowing where your health care dollar goes may shape how you buy health insurance next year. It might even inspire you to tuck away extra savings to cover unexpected health care expenses.
Rising prices for health care affects all of us. Sometimes the dollars available for care fall short of covering the bills.
Most of the cost for your care is covered by your health insurance premiums or employer. Today, in the U.S., the majority of every dollar paid in premiums actually goes to pay directly for health care. The largest percentage, 42 cents, goes to hospitals simply because that’s where the most expensive care happens. Prescription drugs capture the second largest chunk at 21.5 cents. Doctors get 12.1 cents of every dollar. Other health care services and related expenses account for nearly all the rest. Only 3 cents of every dollar is profit.
Most of us feel the pinch of rising health care costs. Still, many of us don’t know what’s behind the increases. One reason is prescription drug costs. The price of prescription medications has increased at a much faster rate than inflation over the past seven years.
Emergency care is another reason. Many people still go the emergency room for non-emergencies – even though that’s the most expensive way to get care.
Ongoing costs related to people who have chronic health conditions that require a lot of care is another big driver. Even if you’re healthy, your premium is combined with those of other members. Pooling premiums ensures we can cover health care costs for all members. For example, if one member needs a heart transplant, it takes premiums from 350 members to cover the cost of one heart transplant.
When health care costs go up, insurers have to find ways to make ends meet so all of our health care bills get paid. Today, insurers are working hard with health care providers to reduce costs. Despite their efforts, insurers also have to look at adjusting premiums for the coming years. Making the health care system work involves hospitals, doctors, drug companies, insurers and consumers working together. We all play a role. We all have a stake in making it work.
Want to know more? Read “Where Do My Health Care Payments Go?”
Originally published 6/1/2016; Revised 2022
Blue Cross and Blue Shield of Montana, a Division of Health Care Service Corporation, a Mutual Legal Reserve Company, an Independent Licensee of the Blue Cross and Blue Shield Association
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