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Anthem Outlines Where Premium Dollars Go
Aug 21, 2013
As a broker, your clients rely on you to provide them with current and updated carrier information. In this article, Anthem thoroughly outlines where premium dollars go. This is a great article to share with your clients and their employees to demystify where exactly, their dollars are being spent.
Here's a primer on premiums
Do you ever wonder what impacts the premium you pay for your plan? You may already know the Affordable Care Act (ACA), also called health care reform, requires insurers to spend 80%-85% of premiums directly on health care costs.
So what makes premiums increase every year?
In general, premiums go up because health care costs increase for everyone. Here are some factors:
- An aging population. People are living longer and dealing with more health problems than before. So the cost of caring for those issues affects overall health care costs.
- Increasing rates of obesity. Obesity can lead to conditions like diabetes and heart disease which are costly to manage.
- New brand-name drugs that don't yet have less expensive generics options.
- Advances in technology. More advanced equipment and treatments can also lead to higher costs that are passed on to all of us.
- Medical errors and excessive or unneeded tests and treatments. Paying for these services also affects overall costs.
- Changes from health care reform (also called the Affordable Care Act or ACA) will continue to take effect. The requirements within the law to enhance and expand benefits will, in some cases, cause increases in health costs.
Anthem knows these are issues that affect members in a big way
Anthem understands the ongoing changes in health care and rising costs affect your household budget directly, and every dollar you save helps.
Here are some things you can control to save dollars on health care.
- To lower your premium, you can try a plan with a higher deductible. A deductible is the amount you pay yourself before your insurance kicks in. With a higher deductible, you get a lower premium. And vice versa.
- To lower your out-of-pocket costs, try to use generic drugs and in-network doctors - both actions will help you save. Here is a helpful calculator showing you how much you can save using generics, and Anthem's Find a Doctor tool can help you stay in-network.
- Also, finding health problems early can help reduce costs down the road. And depending on your plan, you may pay little or nothing for things like yearly checkups and tests, flu shots, cholesterol tests and more. Check out their preventive health guidelines here!
So where do your premium dollars actually go? Take a look
WellPoint, Inc.: About WellPoint (2011) wellpoint.com.
- 83.3 cents pays for health care services for you and all other members
On average, 83.3 cents of every dollar is used to cover the cost of medical care and services like doctor visits, hospital costs, prescription drugs and more.
- 8.8 cents goes toward the cost of running our business
To run any business, you have to pay expenses. These are called operating costs, because they're the costs needed to operate and keep a business up and running.
- 3.4 cents pays for federal, state and premium taxes
Just like you, Anthem has to pay their taxes every year. That includes both federal and state taxes. They also have to pay taxes on the premiums you pay them.
- 4.5 cents is left for their profit
After they're done paying everything out, including taxes, they are left with a profit. For every dollar you give them, Anthem keeps under 5 cents.
Many factors related to health care costs are out of Anthem's control - and out of yours. But they're working hard to keep costs down for their members. It's their job to support high quality health care and find the best rates they can for you. For details on your plan and ways to save, log into www.anthem.com/ca.