The Facts about Health Plan Administrative Costs and Profits

AHIP The Facts about Health Plan Administrative Costs and Profits Premiums Follow Underlying Costs' Premium increases have been driven by increases in the cost of benefits and 209% Benefits 1596 services. Percentage Growth 106 Premiums 596 096 1980 1985 1990 1995 2000 2006 2010 Health Plans' Administrative Health plans' administrative costs as a percent of national health care spending growth Percent of health insurance premiums that go to health plan administrative costs 4.5% 12.5% 4.3% average 5.9% 14.7% average 12.3% 1961 2011 1960 2011 "If you took all the profits that all the health insurance companies made in 2009 and used them to pay for medical care in 2010 you would cover the country's medical bills for...two days..." - Bill Frezza, Competitive Enterprise Institute² Putting Health Plan Profits in Perspective Health insurance plans' profit margins are among the lowest in the health care sector. PHARMACEUTICALS MEDICAL PRODUCTS AND EQUIPMENT PHARMACY AND OTHER SERVICES INSURANCE AND MANAGED CARE MEDICAL FACILITIES 18% 15% 5% 3% 2% "Insurance company profits in the large picture have very little to do with the overall rising cost of health care." - Henry Aaron, Brookings Institution What Drives Premium Increases? INCREASING COST OF HEALTH CARE SERVICES CHANGES IN THE COVERED POPULATION ADDITIONAL BENEFITS NEW TAXES & FEES LEGISLATIVE & REGULATORY CHANGES 1 CMS National Health Expenditures Data https://www.cms.gov/NationalHealthExpendData/03_NationalHealthAccountsProjected.asp#TopOfPage 2 RealClearPolitics.com, Why Washington Can't Reform Healthcare, February 15, 2010 3 Profit Margins by Sector, 2012, Fortune 500 Rankings, May 2013 4 ABC News, Health Insurance Profits: Not So Outrageous After All?, November 10, 2009 Deulgn AP-AI Nighta Maervadt