What factors affect the cost of health coverage?
While CAHP plans strive to keep costs down for their members, the cost of hospital care, physician services, prescription drugs and other services impact the premiums plans charge. In 2005, Americans spent $2 trillion on health care, according to the Centers for Medicare and Medicaid Services. More than half of that went to hospitals and physician and clinical services. Sixteen percent was spent on prescription drugs and nursing home care, while 10 percent went to dental and other professional services. The rest of the $2 trillion was spent on administration, investments, government public health activities, home health care and medical products. The impact of health care costs on premiums is evident in the breakdown of how premiums are spent. A 2006 PriceWaterhouseCoopers study for America’s Health Insurance Plans found 86 cents out of every $1 paid in premiums go to health care providers and services. Another 16 cents are used to pay for prescription drugs, 6 cents are spent on home
