A Brief Look at the Numbers

A Brief Look at the Numbers: Average cost of hospitalization in 2018 was about $10K; the average charge with private insurance was about $20K (The average charge to the uninsured ranges from $40K to $60K) Average number of hospitalizations per year was about 9/100 for ages below 64.

A Brief Look at the Numbers

Total annual payments for hospitalization/100 people= 9x20K= $180K

Annual outpatient charges are estimated at $500

Total annual outpatient charges/100 people= $500×100=  $50K

Annual drug costs across the population estimated at $1200. We can reasonably assume

that drug costs are higher for the over 65 population. We would estimate this to be $500

In the under 65 population.

Total annual drug charges/100 people =$500×100= $50K

Total costs of reinsurance with $50K deductible+purchase of PPO discounts=$20K

If we add these costs together, we find the total charges/100 people= $300000

Notice this is the total cost. Insurance typically pays about ⅔ of the cost; ⅓ of the costs are paid out of pocket in the form of copays and deductibles.

The very cheapest Blue Cross policy for a 31 yo male in zip code 77096 was $257/month or

$3084/yr. The cost for 100 people would be $308K annually but would have a $7400 deductible.( At age 50, the cost was $4000 annually.) The high deductible means that outpatient care is not paid for and that the insurance only pays for the reinsurance and hospitalization costs of $200K.

The gross profit for the insurance company is at least $100K (income per 100 patients of at least $300K less claims of $200K)

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