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Three Must Know Facts About Health Care Costs, and Coping Tips

Posted Aug 27 2009 11:37pm

As purse strings tighten around the globe health care costs will become a bigger and bigger sticking point. In the United States, we have a particular problem.  The cost of health care has skyrocketed far beyond what many Americans can afford.  Health care is basically pricing itself out of business.

A report out this week from the Department of Health and Human Services notes that health care accounts for more than 16 percent of gross domestic product in the U.S., that’s nearly twice the average of other developed nations. Getting insurance through an employer is also less and less of a bargain:  The cost of these premiums has doubled over the last nine years.  What’s worse, as costs go up, the system is still riddled with shoddy care, “”In spite of the vast resources invested, the health care system has not yet reached the goal of high-quality care,” the report says.

Many people saw this crisis coming, but there is so much money at stake and the two political parties are so at odds about how to fix the system, very little improvement is ever made.  Now, small companies and the growing ranks of unemployed are increasingly being priced completely out of the market.

Here are three bare facts every person in America should know about the health care system.

Fact 1: Costs Will Keep Rising for Now
Why do costs keep growing. There are many reasons, including the fact that we have ever more high tech treatments, more older people, and more expensive chronic health problems.

But most experts agree that a key problem is how Americans pay for health care.  The payment system doesn’t reward doctors and hospitals for doing the best quality work, it penalizes primary care doctors (the workhorses of medicine), does nothing to encourage prevention or healthy lifestyles, and encourages overtreatment.

Some doctors and hospitals are doing a great job, but quality varies drastically.  And because of the way medical care is paid for, caregivers may make more money by being wasteful.  (Listen to this NPR On Point radio broadcast: “Getting Costs Right” to understand why there is so much variation in the quality of care in the United States.)

The tsunami is on its way though, as unemployment soars, wages plummet, and the price of health insurance keeps rising.

Fact 2: Even Many of Those With Insurance Will Pay More Out-of-Pocket
More Americans with insurance will be expected to pay a bigger share of their healthcare costs this year and going forward. Expect higher premiums, copays, and deductibles.  For one thing, companies are squeezed and passing more health care costs onto workers. At the same time, however, costs keep going up because there is nothing controlling them.

One key trend is a big shift towards consumer-directed health plans (CDHP’s).  These are plans where monthly premiums are low, but there is a high deductible –  patients have to pay more costs out of pocket before the insurance kicks in.  Watson Wyatt, a company that tracks employee benefits, reports that 51% of employers are offering CDHPs this year up from 47% last year. That number is continuing to climb.

CDHPs save money overall, in part because patients are more cautious about getting services when they themselves are paying the tab. In the tight economy, however, there has a risk of patients skipping doctor’s appointments or skimping on medicines.  So, while people on CDHPs spend less on healthcare overall, they may sometimes be delaying care that they will eventually need.  That’s a big mistake.

Fact 3:  More Americans Will Lose their Insurance
The number of uninsured has been rising over the years, but recent blog posts by health care industry insiders suggest this problem is much worse than the official numbers suggest.  “A huge segment of the American population is simply far too strapped to ever afford the premiums and costs associated with health insurance/health care as it is structured today,” writes health insurance broker John Sinibaldi in a recent post at The Health Care Blog.

As the economy slows, “Health plan enrollment is like a sieve,” write health care consultants Brian Klepper and David Kibbe in a Health Care Policy and Marketplace Blog post.   “At a recent conference of senior health plan executives, all admitted that enrollment had recently dropped precipitously.  Members are switching to other plans. But many more are dropping out because their premiums became unaffordable, or because they’ve lost their jobs,” they write.
It’s a simple math problem.  The cost of insurance is more than people can afford. Of course, once they lose the insurance, they can’t afford to pay for health care either.

Kibbe and Klepper also point to recent data suggesting that companies are cutting coverage for dependents by about 20%.  That means more family members (mainly children) are losing their health insurance.  “That [data] is NOT being reflected in the uninsurance surveys,” Kibbe and Klepper write.

Small businesses and their employees are falling off the insurance rolls at an alarming rate.  Florida may foreshadow what lies ahead.  Kibbe and Klepper point out that: “HHS data from before the economic downturn show that only 39% of Florida’s small businesses – they comprise 95% of all Florida businesses – still offer health coverage to their employees.”

TIPS to Survive the Health Care Cost Blizzard:
•    If you have a CDHP or are uninsured, do everything in your power to set aside money for health care expenses.  Skipping on care you need will only hurt you in the long run and likely cost you more money.
•    Read your insurance policy carefully, if you have any questions call the insurer and find out what your coverage is, but try to make sure you have that information in print.  Make sure you are seeing doctors covered by your plan.
•    If you’ll be paying for a service, ask in advance how you can find out what each service is going to cost (doctors themselves rarely know).  Be polite but determined. if you’re paying yourself, you need to know what it costs.
•    If you absolutely can’t afford a recommended procedure, ask your doctor if it is necessary and whether there are equally good but less expensive alternatives. See if you can find another doctor or hospital that can provide the service for less.
•    Ask if you qualify for charity care, and if not, how you could qualify.
•    Talk to someone with authority in your doctor’s billing office and a social worker if possible.  Try to work out a reasonable payment plan.
•    If you must have a procedure that you can’t pay for, and you can’t negotiate a reasonable plan, at least make a best effort to pay something, however little you can afford, on a regular basis.
•    Retail clinics, now operating in some stores and pharmacies, offer many common services (e.g. for sinus infections, sore throats, and pink eye) for much less than an emergency room.
•    Generic medications are usually cheaper than their branded alternatives, but you should talk to your doctor before making any medication changes.

Got your own tips or suggestions? Please send  them to HealthDame editor or post as comments.

READ MORE
Patient stories: When Insurance Won’t Cover Your Bills
Bargaining Down the Medical Bills

Getting Charity Care in Sacramento

The Health Care Crisis Hits Home

What Can I Do If My Insurance Company Won’t Cover the Cost of Cancer Treatment?

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