Where your health insurance dollar goes

Only a couple of generations ago people paid doctors and hospitals with cash out of their pockets. Health insurance began as a way to protect people if they got sick and their treatment cost more than they could pull out of their bank accounts.

Things are a lot different today, but the purpose of health insurance is the same: protection.

Simply put, health insurance works like this: people pay money, called premiums, into a pool. When someone has a medical service or fills a prescription, a claim is sent to the insurance company. The insurer pays the doctor, hospital or pharmacy from the pool.

“So,” you ask, “for every dollar I pay ConnectiCare in premium, how much actually goes toward paying those claims? How much is ConnectiCare keeping as profit?”

We hear you. Health insurance is an investment, and you expect that we’re returning most of that investment in care to you, your family and others in the community who subscribe to ConnectiCare.

Let me lay it all out on the table. The vast majority of premium dollars we collect go right back out to pay for care. Here’s a breakdown:

The illustration shows that 83 cents of every premium dollar we collected in 2016 went to pay for doctor visits, hospital stays, tests, treatments, surgery and prescription medicine.

So what about the rest?

  • 10 cents of each $1 in premium in 2016 went toward operating expenses – things like working with doctors and hospitals and providing top-notch customer service.
  • 4 cents paid for taxes and fees (like you, we pay taxes).
  • 3 cents ultimately went to profit. The smallest percentage.

Some of that profit we reinvest in developing new (and better) products and services to live up to our promise to make it easier for you to get the care you need.

We have a wonderful health system in Connecticut. But it’s indisputable: health care costs money. We work with doctors, hospitals and others on ways to save money, both for us and for you, our members, without compromising care. Everyone, though, can help.

Looking for ways to make your health care dollars go further?

We’ve got tips for you on ways to save.

About Neil Kelsey

Neil Kelsey, vice president and chief actuary at ConnectiCare, is a Fellow of the Society of Actuaries and a Member of the American Academy of Actuaries. He has over 30 years’ experience in health insurance actuarial work and is a member of the Advisory Board for the UConn actuarial program. Mr. Kelsey is a past president of the Actuaries’ Club of Hartford and Springfield, and currently serves on the Board of Directors of the Connecticut Small Employer Health Reinsurance Pool (CSEHRP).