For profit health insurers are required by law to spend at least 80% of their premium income on actual medical expenses, with all overhead including salaries and profits representing the other 20% (For nonprofits, 70%). Most people wouldn’t be satisfied with a 20% drop in health insurance costs. And, for that 20%, in return you get the insurers’ market clout which bargains with the medical providers for lower charges. If you look at the EOB the insurer sends you after every transaction, you see the providers’ list price, vs what the insurer bargained for on your behalf, and it’s usually more than 50% off, which more than makes up for the 20% overhead. In fact, in the system as it is, the only force which is allied with you to cut costs is the insurer, ironically. Of course, a single payer and/or nonprofit will do that as well; in fact, Medicare with its huge member base, is the gold standard for discounted charges that all other insurers strive for
If you look at where the costs go, the biggest are hospital admissions, mainly the doctors’ charges, and pharmaceuticals.
