Where Your ACA Premium Dollar Goes

Where Your ACA Premium Dollar Goes

Analysis shows more than half pays for physician care and prescription drugs.

Some 52 percent of the annual premium for an individual health insurance policy pays for office-based care from a doctor and prescription drugs.

That’s according to an analysis from researchers at the Robert Wood Johnson Foundation and the Urban Institute on how premium dollars are spent.

The researchers studied medical claims filed by individuals with silver-level level health plans purchased over state or federal health insurance exchanges created by the Patient Protection and Affordable Care Act or directly from a health insurance carrier. The average annual premium was $4,700 this year.

The researchers then divided the average annual premium by types of medical claims that matched the 10 essential health benefits required by the ACA to be included in health plans sold over the state and federal exchanges.

The largest share of the average annual premium—30 percent—went to office-based care provided by a doctor or other medical practitioner. The second-largest slice—22 percent—went to pay for prescription medications. Third and fourth on the list, respectively, were outpatient care like from an ambulatory surgery center (17 percent) and inpatient care from a hospital (15 percent).

Medical services representing the three essential health benefits receiving the lowest share of the average annual premium were: maternity/newborn care (6 percent); rehabilitative care (2 percent); and pediatric dental and vision care (1 percent).

Two bills that could replace the ACA—the American Health Care Act passed by the House and the Better Care Reconciliation Act under consideration by the Senate—would allow states to seek an exemption to the federal essential health benefits requirement and define what benefits must be included in plans.

“Eliminating benefits from a plan’s coverage can reduce premiums, but it increases the cost of using that type of care for people who need it,” researchers warned in the analysis.

For example, a person whose individual health plan did not include a prescription drug benefit would pay an additional $1,836 premium for drug coverage, according to the analysis.