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Health care costs are rising. You may wonder what you're getting for your money. How is your monthly payment spent? You know it pays for your care, but where does it really go? About 90%, or 90¢, pays for your care. The other 10%, or 10¢, is used by the insurer to provide customer service, process claims and offer programs to keep you healthy.
Here's where your premium dollar goes each month:
Hospitals (39¢) – The largest chunk of your premium dollar – 39¢ – goes to hospitals, even if you never go to one. Your premiums get pooled with other members' premiums. Insurers, like BCBSMT, use this money to pay claims. If hospitals charge your insurer more, it takes more of your dollars to cover those charges.
Hospitals use the money to:
Doctors (22¢) – About 22¢ of your premium goes to pay doctors and other health care providers. Keep in mind, a specialist costs more than a family doctor. And, doctors in a larger city may cost more than those in smaller and rural areas.
Doctors use the money to:
Drug Costs (21¢) – U.S. drug spending is going up each year by 7.3%. Many factors cause this increase. Many new drugs that treat serious illness have big price tags2. More people are insured now. They can get care and drugs that they may have gone without. So more people are spending more on drugs.
Drug costs include:
Other Health Care Services (8¢) – Health care services like those listed below are a small part of your premium.
These services include:
Other Costs (10¢) – The last 10¢ of your premium dollar goes to the insurers to cover things like processing claims, providing customer service and offering programs to help you stay well. The 2 or 3¢ that is left after covering these costs of care is the insurer's profit margin.
Many health care costs are related to personal behavior. Unhealthy habits can result in chronic health issues, which cost our economy an estimated $1 trillion each year. Many long-term illnesses can be prevented or managed when found early. Most health insurance plans cover a range of preventive services like screenings, immunizations, and other types of care. Be sure to take advantage of these benefits.
Health care fraud is a key driver of rising health care costs. About 3% of all health care spending — or $68 billion each year — is lost to health care fraud. Here are some things you can do to help prevent health care fraud and abuse.
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