HEALTH PLANS SUPPORT SOLUTIONS TO LOWER COSTS FOR ALL AMERICANS

The following information was released by the America's Health Insurance Plans (AHIP):

- by AHIP

"Health plans are doing everything in their power to shield Americans from the high and rising costs of medical care, and we welcome any opportunity to discuss common-sense solutions to lower costs for everyone." Mike Tuffin, President and CEO, AHIP

Health insurance premiums reflect the underlying cost of medical care, plus a modest, regulated risk margin.

Health plans' profit margin was 0.8% last year, 2024 NAIC data show. In 2023, the net income of health plans accounted for about 0.5% of U.S. health expenditures ($4.9 trillion, per CMS data). By comparison, the pharmaceutical industry averages 15-20% margins.

Health plans are the only part of the health care system whose profits and administrative costs are capped under federal law. Health insurers must spend at least 85% of group premiums and 80% of individual premiums on medical care. If those thresholds are not met, health insurers must pay rebates to consumers. Since 2012, consumers have received nearly $12 billion back from insurers, with more than $1 billion in 2024 alone, according to KFF.

Learn more about where Americans' health care dollars go by clicking here or on the infographic below.