health care utilization cost

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Definition - What does health care utilization cost mean?

Health care utilization cost is the total amount paid by an insurance plan for the insured parties' health services. Health care utilization costs are one measure used to determine the cost of an employer sponsored health insurance plan.

SureHire explains health care utilization cost

Employer sponsored healthcare plans are provided for many workers in the United States. These programs vary with regard to the types of and value of the benefits provided. The amount of the health care that is not covered by an employee's co-pay or deductible is the health care utilization cost that must be absorbed by the insurer. In 2016, employer-sponsored preferred provider organization plans spent an average of $25,826 providing healthcare to a family of four.

The total cost of paying for insured health care services for employees in one factor used to determine the premiums charged for health insurance. To reduce the total cost of providing health insurance for employees, some plans require that the employee pay a higher deductible before health services are covered. Other health insurers reduce the types of services covered or implement other service-based strategies to reduce utilization costs.

Employer-sponsored healthcare plans' utilization costs and employee expenses for healthcare have increased steadily over the past several years with a shift in past 15 years to passing on more and more cost to the covered employees.

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