AHIP: Drugs Still Are Largest Piece Of Commercial Plans’ Premiums

The health insurance lobby AHIP reports that the percentage of premium dollars commercial insurers spent on drug and medical services ticked up slightly from 2018-2020, compared with data from 2016-2018, even as use of medical services dropped in 2020 due to the pandemic.

The analysis finds 22.2% of premium dollars went toward prescriptions drugs, compared to 21. 5% for drugs in the analysis of claims from 2016-2018, which the lobby released in 2020. The portion of premiums spent on in-patient and outpatient services remained flat, but the amount spent on doctors' visits dropped from 12.1% in the previous analysis to 11.8% in the updated version.

In total, about 82.4 cents out of every dollar went to medical claims, compared to the 81.6 cents per dollar in the previous three-year analysis. “American deserve to know how their premium dollars are used,” AHIP said when unveiling the new report.

“This 3-year trend data includes the first year of the COVID-19 pandemic, when health care utilization was down dramatically as patients deferred care and isolated due to the risk of infection,” the lobby’s president and CEO Matt Eyles said in a statement. “If Americans are to experience lower premiums, we must improve competition among Big Pharma, hospitals and health care systems, and specialists. That is how we make coverage and care more affordable and accessible for everyone.”

Inpatient care made up about 19% of the premium dollar, outpatient care accounted for 19.9%, and 3.3% went toward emergency care, according to AHIP’s analysis. Another 11.8% went toward physician visits and 6.2% went toward other out-patient services, including dialysis.

The remaining funds were dedicated to taxes and fees (3.8%), other business fees (3%), cost containment (2.1%), quality improvement (0.8%), and other administrative expenses (4.2).

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