Biggest chunk of the health care dollar goes to prescription drugs

The greatest percentage of the health care dollar goes to prescription drugs, at 23.2 cents, according to research from America’s Health Insurance Plans (AHIP) and Milliman. The survey examined commercial health plan data from 2014 to 2016.

The analysis found:

  • 23.2 cents goes to pay for prescription drugs;
  • 22.2 cents goes to pay for doctors;
  • 20.2 cents goes to pay other costs at doctors’ offices and clinics;
  • 16.1 cents goes to pay for hospital stays;
  • 4.7 cents goes to pay federal, state, and local taxes;
  • 1.8 cents pays for customer engagement and customer service;
  • 1.6 cents pays for care management;
  • 1.6 cents goes to pay for activities related to claims; and
  • 2.3 cents of every health care dollar goes to health insurance provider profits.

“Americans value services that deliver real results—improving health and wellness, coordinating care with doctors and nurses, eliminating fraud and abuse. Plans use a meaningful part of premiums to make coverage more efficient and effective,” said Matt Eyles, incoming president and CEO of AHIP. “But as prescription drug prices and medical costs continue to rise, it forces premiums higher for hardworking American families. Health plans work hard to negotiate lower costs and premiums for their members. We need to come together to find new ways to provide people with the care they need at a price they can afford.”

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