How Much Do You Know About Costs?

In 2017, according to the Centers for Medicare and Medicaid Services, healthcare spending for every man, woman and child in the U.S. totaled nearly $11,000 – more than any other wealthy country. The interesting thing is that very few of us really know what goes into this number or who pays the bills. Here are a few facts you may find interesting.

  • The average cost of employer-based health insurance for a family in 2019 was $19,616.
  • The Census Bureau reports that 91.5% of Americans have health insurance coverage.
  • In 2017, the average ER visit cost about $1,400 – an increase of 176% in 10 years.
  • Federal, state and local governments currently pay for about 45% of all healthcare services.
  • From 2000 to 2016, spending on prescription drugs rose by 69% – more than any other component.
  • The Kaiser Family Foundation reports that in the past year, 50% of Americans put off needed healthcare because of cost.

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How a Premium Dollar Is Spent

premium-dollarAmerica’s Health Insurance Plans, a national trade association whose member companies provide insurance coverage and health-related services to consumers and businesses, has released a study revealing the breakdown of today’s healthcare premium dollar, as follows:

  • 23.3 cents of every premium dollar is used for prescription drugs
  • 22.2 cents cover the cost of physician services
  • 20.2 cents are used to pay for office and clinic visits
  • 16.1 cents are used to cover hospital stays
  • 13.5 cents are applied to care management, administrative expenses, business expenses, provider management and other fees
  • 4.7 cents of every dollar go to taxes, and…

AHIP reports that on average, 2.3 cents of every premium dollar make it to the bottom line as net profit.

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Benefits Before Pay

self-fundingThe American Institute of CPAs reports that its poll of 1,100 working adults revealed that by a 4 to 1 margin, workers would choose a job with benefits over an identical job that offered 30% more salary without benefits. Employed adults estimate that benefits represent about 40% of their total compensation. When asked which benefits are most valuable over the long run, 56% said a 401(k) match or health insurance while just over 30% said a pension.

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Critical Illness Coverage More Widespread

Voluntary benefits are a growing trend that allows employers to enhance their overall benefits package. While voluntary dental, vision, life and disability insurance are familiar, the popularity of critical care insurance has been growing dramatically. Critical care coverage typically pays a lump sum directly to the insured upon diagnosis of a covered critical illness and is generally used for daily living expenses and things like co- payments, mortgage payments and childcare. This increasingly popular offering can provide a financial  safety net against hardship driven by out-of-pocket medical expenses.

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Failure of Super Committee To Have Little Impact on Health Care

While the failure of the congressional “super committee” to reach an agreement triggers a 2% across-the-board cut to Medicare, this is thought to be far less than the $500 to $700 billion lawmakers on the panel were discussing prior to their deadline. Physicians and hospitals will feel the impact but the $123 billion that will need to be cut over the next 10 years is minimal compared to cuts imposed by deficit reduction legislation enacted in recent years. Continue reading