Better Solutions for Healthcare

AHIP: Where Does Your Health Care Dollar Go?

Where Does Your Health Care Dollar Go?
May 22, 2018

Your premium—how much you pay for your health insurance coverage each month—helps cover the costs of the medications and care you receive. It also helps to improve health care quality and affordability for all Americans. Here is where your health care dollar really goes.


The objective of this analysis is to understand how premiums for a typical commercial health insurance plan are invested.

Specifically, the analysis shows the inflation-adjusted average annual amounts paid by commercial health insurance plans in 2014-2016 for the medical care of plan members; the average annual amounts paid for general operating expenses of the health plan in 2014-16; and the average annual reported profit (or loss) in 2014-16.

To determine the annual amounts paid for medical services in 2014-16, the commercial claims data from the MarketScan® Commercial Claims and Encounters database (Truven Health Analytics, Inc) were summarized. The Inpatient Services file, the Outpatient Services file, and the Outpatient Drug file of the MarketScan® database were utilized for the study.

AHIP randomly selected a total sample of 30 health plans: five for-profit and 25 not-for-profit plans.  Plans were selected from a list of all health plans that had the majority of their business (i.e., greater than 50% of enrollees) in the commercial market, based on enrollment data from AIS’s Directory of Health Plans: 2014(AIS). The not-for-profit plans sample was further reduced by excluding three plans that had just started operations in 2014, one plan that ceased operations as an independent entity during the study period, and four plans that lacked publicly available statutory information.

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