Surprising Facts about Health Care Spending and Health Insurer Profits – June, 2010
In 2007, national spending for health care was $2.2 trillion. Projections for 2010 anticipate spending to grow to $2.6 trillion, and in 2018, spending will likely be $4.4 trillion.1 Some of the facts about national health care spending are unexpected.
On average, 87 cents of every dollar Empire receives from members is spent covering medical care and services like doctor visits, hospital cost, prescription drugs and more.2 Another 10 cents of the premium dollar funds services that we provide like claims processing, enrollment and billing, provider credentialing and complying with government regulations. We also use this portion of the premium dollar towards efforts to control the rising cost of care, such as supporting new advances in health information technology – like electronic medical records. This leaves only three cents of each premium dollar remaining for profit.
Did you know that health insurer profit margins are among the lowest in the health care industry at 2.2%? Health insurer profit margins trail behind pharmaceutical profit margins at 19.3%, and medical products and equipment profit margins at 16.3%.4 In fact, the combined annual profits of the top 10 health insurers are equal to just two days worth of national health care expenditures – or 0.5% of the estimated $2.5 trillion the U.S. spent on health care in 2009.3
Controlling the cost of care is everyone’s responsibility, and Empire is working diligently to help this effort. Educating our members about health and wellness, enrolling members with chronic conditions in care management programs, and supporting information technology advances are just a few ways that Empire is working to control America’s cost of health care.