FACT CHECK: Health Plans’ Profits Accounted for > 1/2 of 1% of Total Health Care Spending in 2010
May 17, 2011
Cost, Delivery System Reforms, Drug and Device Cost Containment
According to a report from America’s Health Insurance Plans (AHIP), the health plan industry has an average profit margin of only 4.4% and is not a primary driver of rising health costs. The report ranks profit margins throughout the health care sector and the health plan industry ranks 12th out of 16–behind major drug manufacturers (with the highest profit margins at 15.4%), medical instruments and supplies (13.9%), and other drug manufacturers (13.6%). Recognizing that rising health costs pose a major issue to the sustainability of the health system, health plans and organizations like America’s Health Insurance Plans have begun to focus on cost-saving and value-maximizing efforts such as targeting patients for preventive care, expanding medical homes, supporting the use of health information technology, and adjusting incentives.