Stethoscope and health care costsCompared to two years ago, a smaller portion of premiums are going toward prescription drug costs, while a larger portion is going toward in-patient care

Understanding health care costs is complicated, to say the least. There’s the amount billed for a service, the negotiated rate ultimately paid, and then how much the service actually cost the provider. And where does that money go? There are facility fees, provider fees, drug costs, administrative expenses, and so forth.

America’s Health Insurance Plans (AHIP) recently released an updated breakdown of how American’s health care premiums are allocated among the various health care services.

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“Every American deserves affordable, high-quality health care that provides them with real value and peace of mind,” said Matt Eyles, AHIP president and CEO. “Health insurance providers invest health care premiums in pursuit of that goal.”

Compared to two years ago, a smaller portion of premiums are going toward prescription drug costs (21.5% versus 23.3% in 2018), while a larger portion is going toward in-patient care (19% versus 16.1%). The percentage of premiums going toward net profits has increased since 2018–from 2.3% to 3%–but still makes up just a small portion of total spending.

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