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 BCBSNM, 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:
- Pay staff
- Update, expand and build new hospitals
- Buy new equipment to test and treat patients
- Care for the uninsured
- Make profits (2% for a small hospital to 20% or more for a large hospital system).1
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:
- Cover their cost for care for patients
- Pay staff
- "Keep the lights on" at office or clinic
- Buy equipment to test and treat patients
- Cover their medical malpractice insurance
- Pay themselves
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:
- Research and development
- Making the drugs
- Getting them out to people
Other Health Care Services (8¢) – Health care services like those listed below are a small part of your premium.
These services include:
- Therapy
- Dental
- Skilled nursing
- Hospice
- Other indirect provider services
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.
Take Charge of Your Health
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.
Help Prevent Health Care Fraud and Abuse
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.
- Review your health care charges. Look over your Explanation of Benefits from your insurer and receipts from your doctor or pharmacist to make sure the right dates of service are recorded, and that you are billed for the right services or medications.
- Protect your health information. Keep your insurance card and health care records in a safe place at all times.
- Monitor your medications. Count your pills each time that you pick up a prescription.
- Report suspected fraud and abuse as soon as possible. Blue Cross and Blue Shield of New Mexico members can call our Provider Fraud Hotline at 800-543-0867 to report suspected health care fraud.
Percentages based on National Health Expenditure Data, Centers for Medicare and Medicaid Services, Agency for Healthcare Quality and Research, IMS Institute, 2013.