Sunday, March 19, 2006

Show Me The Money

Not too many years ago, hardly a day went by when someone I was engaged in a conversation failed to say “show me the money”. The line was taken from the movie “Jerry McGuire” and just seemed to gain more fame than the actual movie.

Today people are saying the same thing about health insurance. Everyone complains about the rate increases and wants to blame the carriers. Fact is, the real driving force behind health insurance rates are the claims of people who use the plan.

So where did the money go?

According to a report by Blue Cross of Tennessee, the money went here.

18% was for prescription drugs
17% was for hospital inpatient expenses
17% for outpatient care
34% was for physician charges
2% was for “other” expenses such as DME, dental, orthotics, etc.

Two things are quite telling about this report.

First, prescription meds continue to make up a larger part of overall health care. What is interesting is that meds take up more health care dollars than inpatient hospital charges. Most people think of hospital bills as being outrageous but very few are concerned about the cost of meds.

Second, since hospital bills are a major fear it is interesting to note that only 17% of medical bills are hospital charges.

What this means is, if you have a major illness or accident and run up $40,000 or so in medical bills, only $6800 or so (on average) will be for the hospital charges. Your doctor(s) will consume another $13,600.

Show me the money? That is where it goes.
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