The cost of health insurance

By Ryan Schuster

Many blame insurance companies and rising health insurance premiums for increases in health care costs. But insurers are not the main driving force behind increasing health care costs.

Insurance premiums only make up a small slice of the U.S. health care spending pie. In fact, roughly half of health care costs come from hospital care and services provided by physicians and clinics, much more than the 6 percent attributed to net health insurance costs. Below is a full pie chart breakdown of U.S. health care costs from 2010 from the U.S. Centers for Medicare & Medicaid Services (CMS):

Advances in medical technology have made more complex (and more expensive) procedures possible, helping patients, but driving up costs. Americans are also using more health care services than in the past, going to the Emergency Room, urgent care centers or doctor’s offices to treat things such as common colds that years ago they wouldn’t have sought medical attention to treat. As medical technology has improved and as we have started to use more medical services, health insurance has become more comprehensive, covering more services, such as prescriptions, that years ago wouldn’t have been covered by insurance.

Members expect their insurance companies to cover more services. Legislative changes, such as the passing of the Affordable Care Act (commonly referred to as Obamacare) also add to what services insurers are required to provide, which provides further upward pressure on premiums. Unfortunately, Blue Cross Blue Shield of North Dakota expects the Affordable Care Act to lead to premium increases for our members.

Health care costs have skyrocketed in recent decades, but the percentage of health care costs covered by private insurers has increased, while the percentage of health care spending coming from out-of-pocket spending by consumers has actually decreased (see National Public Radio graphic below using CMS data):

Insurance companies play a role in health care costs. We take our responsibility to represent our members seriously and we are always looking for ways to improve and to become better stewards of our members’ premiums. Find out more about how we spend our members’ premium dollars and how premiums are calculated.

We understand that people are upset about health care costs. We are too. We’re doing what we can to hold down costs, including working with doctors and hospitals to reimburse them more based on quality of care than quantity of services delivered.

Ryan Schuster is an editor in the Communications department at Blue Cross Blue Shield of North Dakota.

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