Prescription Drugs Are Largest Single Expense Of Consumer Premium Dollars

by Kristine Grow

March 2, 2017

New Research from AHIP Demonstrates Need for Action on
Out-of-Control Drug Costs

WASHINGTON, D.C. – America’s Health Insurance Plans released an infographic today, which shows that prescription drugs are the single largest expense of a consumer’s health care premium dollar.  View the visual research here.

Rising prescription drug costs account for more than 22 percent of every premium dollar – outpacing physician, inpatient, and outpatient hospital services.  This figure would have been even higher if medications administered during inpatient hospital stays were included.

Overall, more than 97 cents of every premium dollar for a commercial health plan is invested into direct medical costs, and supporting access, service and operations. Commercial plans include those available through employers of all sizes, as well as through the individual market.

“This is the latest evidence that shows prescription drug costs are out of control,” said Marilyn Tavenner, President and CEO of AHIP. “The vast majority of every dollar spent by consumers on insurance premiums is returned in direct medical services, including prescription drugs.  That’s why we need real solutions that answer the President’s call to ‘bring down the artificially high price of drugs’ so that consumers can affordably get the care they need.”

Operating costs, which represent approximately 18 percent of every premium dollar, include services that directly impact consumers’ health and health care experience, such as health improvement programs, effective care coordination with doctors, customer service operations, clinical expertise and quality reviews, and consumer-facing technology.

“Health plans are committed to their customers. They are investing in the tools and technology to improve the care and coverage they receive so they can improve their health,” Tavenner observes. “These investments will deliver not just to a better consumer experience, but also higher-quality care, lower costs, and improved health and financial stability for all Americans.”

Click here to view the infographic, as well as the research methodology.