Where do your health insurance dollars go?
I’ve written a lot about the factors that contribute to health insurance rate increases, but sometimes words aren’t enough. Blue Shield of California decided to illustrate its costs with a picture.
The insurance company explains how it spends its money with this image of a dollar-
Image taken from www.blueshieldca.com
Notice that 85 cents or 85% of what the insurance company spends goes straight to medical costs. The data for this image comes from Blue Shield of California’s “internal data” but it’s a pretty accurate representation of health insurance spending in Rhode Island. According to data from RI’s health insurance commissioner, health plans in RI spend between 82% and 87% of their money on medical costs.
How do we chip away at that number? It’s going to be a long, hard process, but Rhode Island is working on it. One plan holds health insurance companies responsible for pushing those costs down.
Thanks to Sarah Kiff from the Washington Post for writing about this first.
Wow…I find it hard to imagine that this is accurate. Too bad they didn’t show that Blue Shield’s CEO last year made $4.6 million and the average primary care physician makes about $150,000. I wonder what the physician’s Cost of Running a Medical Office dollar looks like? My naive guess would be something like for every dollar earned it costs about 50 cents for write-offs (money that his never collected either from patients or insurance companies after you’ve already seen them and performed the work), 15 cents for rent, 5 cents for utilities, 15 cents for staffing (this includes hiring specialized people who are trained to “code” in “insurance speak” (also known as ICD-9) to try to get paid within 180 days from an insurance company or Medicare that dictate what you can earn despite you having no control over your own expenses like rent or staffing costs), 5 cents for inventory (vaccines, gowns, alcohol pads, etc), 5 cents for malpractice insurance, 3 cents for computer upkeep/EMR maintenance (now all coding needs to be done online), and 2 cents for physician salary…only my 2 cents doesn’t add up to any where even close to 3% of $4.6 million.