JD D05
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A few know on here but probably not many know. My company (family) does benefits for companies all over the country some you have heard of most likely, thought I would take a little time to explain cost etc.
Medicare and it's pricing model is basically the baseline or how we measure cost. Medicare give or take runs on a 2-3 % profit...When you break down cost it is really just Unit Cost X Volume Cost.
So where do premium dollars go? This has evolved over the years mostly due to RX but here is the break down on average.
Hospital = 41.5%
RX = 25%
Physician= 20%
Stop Loss ( in self funded plans) = 10%
Vendor= 3.5%
Hospitals are obviously the biggest driver and as consumers it is basically impossible to get a copy of the hospital charge master docs. In most cases Hospitals charge 300/400/500 times Medicare. RX the second largest driver use to not be that way but now we have drugs that can cost up to 1M a year with many others with huge price tags ( many people aren't aware we have ways to get subsidized for those that are not based on income). Physicians are not really a major driver and in most cases they work at 120 / 130 % of Medicare. Stop Loss is an element used when employers basically self fund the plan. This strategy basically makes the employer the insurer...I can get into more of that if people want.
Hospital costs double every 10 years roughly.
You hear a lot of bringing consumerism into health care etc which really isn't fair or possible for the consumer, people are worried about being good Fireman etc. What we do when a person needs a procedure is negotiate a cash price up front with the hospital at 150 to 200% of Medicare. We have enough of a value add MOST the time for the Hospitals to agree with. Mostly they don't have to deal with collections which they say is 10 cents on the dollar not sure how true that is. Way more to it but this is a little knowledge some might like. For companies that go with a honest TPA when they have a good claims year get the premiums returned.
Medicare and it's pricing model is basically the baseline or how we measure cost. Medicare give or take runs on a 2-3 % profit...When you break down cost it is really just Unit Cost X Volume Cost.
So where do premium dollars go? This has evolved over the years mostly due to RX but here is the break down on average.
Hospital = 41.5%
RX = 25%
Physician= 20%
Stop Loss ( in self funded plans) = 10%
Vendor= 3.5%
Hospitals are obviously the biggest driver and as consumers it is basically impossible to get a copy of the hospital charge master docs. In most cases Hospitals charge 300/400/500 times Medicare. RX the second largest driver use to not be that way but now we have drugs that can cost up to 1M a year with many others with huge price tags ( many people aren't aware we have ways to get subsidized for those that are not based on income). Physicians are not really a major driver and in most cases they work at 120 / 130 % of Medicare. Stop Loss is an element used when employers basically self fund the plan. This strategy basically makes the employer the insurer...I can get into more of that if people want.
Hospital costs double every 10 years roughly.
You hear a lot of bringing consumerism into health care etc which really isn't fair or possible for the consumer, people are worried about being good Fireman etc. What we do when a person needs a procedure is negotiate a cash price up front with the hospital at 150 to 200% of Medicare. We have enough of a value add MOST the time for the Hospitals to agree with. Mostly they don't have to deal with collections which they say is 10 cents on the dollar not sure how true that is. Way more to it but this is a little knowledge some might like. For companies that go with a honest TPA when they have a good claims year get the premiums returned.
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