For the assessment, AHIP examined commercial claims data from Truven Health Analytics’ MarketScan Commercial Claims and Encounters database to discover the amounts paid for medical services. AHIP estimated operating costs and profitability by assessing 10K forms publicly traded insurance companies submitted to the Securities and Exchange Commission and 990 forms filed with the Internal Revenue Service for private nonprofit organizations in 2014.
Analysts defined drug costs to include outpatient, physician- and self-administered medications. Drugs administered in inpatient settings were not included. Operating costs represent a payer’s consumer-focused services, such as running customer service operations, quality reviews and data analysis, according to the report.
AHIP found 80 percent of premiums go to medical expenses, followed by operating costs (18 percent) and the payer’s net margin (3 percent).
Here is the breakdown.
Prescription drugs — 22.1 cents
Physician services — 22 cents
Outpatient services — 19.8 cents
Inpatient services — 15.8 cents
Operating costs — 17.8 cents
Net margin — 2.7 cents
Note: The total exceeds 100 percent due to rounding.
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