A Picture Worth a Thousand Words-Where Does Your Health Insurance Dollar Go?

Back in 2006, Price Waterhouse Coopers did an excellent synopsis on what percentage of each healthcare dollar was spent on what.  It was a fantastic breakdown, and it’s really difficult now, to find that old document on the internet.  But today, I finally found the picture that I’ve been looking for! The breakdown isn’t much different today, so the picture still applies.  Costs might even be heavier today on care vs. profit.  But this visual, I’ve found to be very helpful, when trying to think through possible solutions to today’s health insurance cost crisis.

Take a look at this picture.  What do you see?  Given what you see, where do you think the problems with our healthcare system lie, and how would you propose to your congressmen and women to fix it?

My friend, Dr. Robert Nelson, has some suggestions, offered in his blog, The Sovereign Patient: When Did Health-Care Become One Word?

 

4 Replies to “A Picture Worth a Thousand Words-Where Does Your Health Insurance Dollar Go?”

  1. I know people will say, “look who funded the study, AHIP”, but take a look at AHIPs predictions that Obamas Whitehouse tried to debunk.

    https://obamawhitehouse.archives.gov/blog/2009/10/12/reality-check-ahips-study-hard-take-seriously

    Every single one of AHIPs predictions were correct. See link below. Who would be able to provide more clear data on the breakdown of Health Insurance Costs than AHIP?

    Granted, the third party payment model does inherently add to the cost of healthcare, but that’s true with all third party payment mechanisms, including a Medicare and Medicaid.

    The purpose of this post was to provide a better picture of insurance profit relative to total cost. I think this is helpful, especially for those like Bernie Sanders, who continue to perpetuate the narrative that insurance profit is the problem. Obviously, it isn’t.

  2. The first problem I see is who sponsored the PWC study. AHIP. America’s Health Insurance Plans.

    Of course it minimizes the direct impact they have on the cost of healthcare. What it doesn’t show is the indirect impact they have by obfuscating the true cost and, along with hospitals and health systems, stonewalling price transparency efforts.

    1. I would venture to say it’s more the healthcare provider that stonewalls transparency. I’m in agreement that transparency is needed, which is why I am in favor of direct pay care. Insurance should only be used for catastrophic health care.

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