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Factors in Cost

At Blue Cross Blue Shield of Massachusetts, we use approximately 90 cents of every premium dollar we receive to pay for health care services for our members. The approximately 10 cents remaining is used for administrative purposes.

Dollar Bill

What Are Some of the Key Factors Driving Rising Health Care Costs?

  • Unit Cost: This term refers to the increase in the price of health care services. (For example, the cost of a doctor's visit this year versus last year.)
  • Utilization (use): This term refers to the increase in the demand for health care services. (For example, is there an increased demand for prescription drugs?)
  • Severity: This term refers to changes in the complexity of health care services used. (For example, are patients receiving MRIs instead of a less complex, and less expensive technology, such as X-rays?)
  • Provider Mix: This is a term that refers to where people are receiving care over time. (For example, are more people receiving care in higher cost academic medical centers instead of community hospitals?)

What Drives Health Care Costs in Massachusetts?

What Drives Health Care Costs in Massachusetts?

*Numbers are approximate and vary slightly from year to year.

Half of the increase in health care costs in Massachusetts is due to higher prices. Other factors include the growth in demand for services, the cost of using more sophisticated technology, and consumers choosing to go to more expensive treatment centers for care.

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