Last Updated: October 25, 2010
Healthcare reform promises to offer health insurance coverage to a wider variety of Americans, but it doesn’t mean healthcare is going to become cheaper, at least not in the short term. A September study by Hewitt Associates notes that 2011 health care cost increases will be at their highest levels in five years with an average 8.8 percent premium increase for employers, compared to 6.9 percent in 2010 and 6 percent in 2009.
Hewitt said the average total health care premium per employee for large companies will be $9,821 in 2011, up from $9,028 in 2010. The amount employees will be asked to contribute toward this cost is $2,209, or 22.5 percent of the total health care premium — this is an increase of 12.4 percent from 2010 levels, when employees contributed $1,966, or 21.8 percent of the total health care premium.
And consider this — average employee out-of-pocket costs, such as co-payments, co-insurance and deductibles, are expected to be $2,177 in 2011, a 12.5 percent increase from 2010 ($1,934). These projections mean that in a decade, total health care premiums will have more than doubled, from $4,083 in 2001 to $9,821 in 2011. Employees' share of medical costs — including employee contributions and out-of-pocket costs — will have more than tripled, from $1,229 in 2001 to $4,386 in 2011.
So what can you do? You need to make a big change in your mindset about what you spend on healthcare, no matter how great your coverage. Increasingly, people will need to shop for healthcare coverage and services much like they comparison-shop for food and merchandise. Employers and insurers will continue to shift costs to individuals for a variety of healthcare services, and though the initial adjustment might be scary, those that get the hang of it early will become better at selecting healthcare overall.
With the cost of medical care, it makes sense to get outside advice. A qualified financial planner can discuss all medical issues you have as part of your financial planning process. But here are some potential money-saving ideas to consider in the future:
Do a procedure price-check: Yes, it’s possible to know what procedures cost in your area. When time is of the essence, many individuals and families simply want medical procedures done only to find shocking cost numbers later. It’s absolutely appropriate to talk through the various cost factors of operations and treatments at the time you’re discussing the medical benefits of that treatment. In fact, the question, “Why does it cost so much?” is a way to get doctors to fully justify their recommendations on care and to find out if they also might suggest treatments that are just as effective but significantly less expensive. There are also online resources that might help you make a decision including Healthcare Blue Book, a nationwide site that offers averages on hundreds of medical, dental, laboratory test, surgical and medical equipment costs by zip code. At the very least, these services offer ways to start the pricing discussion.
Plan your FSA strategy: Health-care reform has made some changes to flexible spending accounts (FSA) for 2011. Starting in 2011, employees will no longer be able to use FSA money for non-prescription drugs (except insulin). FSA coverage for children, however, has expanded. Employees can use funds to pay medical costs for any child who is under the age of 27 by the end of the year. However, there will be lower contribution limits in the future. In 2011, employers are permitted to allow contributions of up to $4,000 in FSAs, but that limit will shrink to $2,500 in 2013 — so employees planning expensive procedures might want to stockpile funds there now.
Take responsibility for your own health: Want to save money on healthcare overall in the future? Lose the weight. Quit smoking. If you have a history of family disease, start examining those risk factors now.
Involve your doctors in your affordability quest: Yes, there are some doctors who charge a lot of money to do what they do. That doesn’t mean they won’t fight for you if you need a procedure and you can’t afford it or your insurance won’t pay. Hospital administrators listen to doctors who bring patients to their institution, so work together.
Put your health insurer to work: The best time to understand your insurer’s advocacy processes — assuming they exist — is well before you need them. Call your claims department and ask how they advocate for insured customers if a procedure bill comes in too high. Obviously, if you do your due diligence on average fees before you need a procedure this will be less of an issue, but it’s important to know if your insurer will work with you to audit and negotiate a hospital bill if your out-of-pocket numbers come in high.
Scrutinize your bills: When it comes to medical billing, mistakes get made, either intentionally or unintentionally. Talk these issues over with your insurer and go back to the practitioner or institution to get clarification and demand an audit if necessary.
Get advice from the state: Some states have very stringent laws governing health insurance and medical costs; some don’t. Read as much as you can about how your state insurance and medical licensing departments operate and find out what you can about their role as patient advocates.
Question follow-ups and other procedures: Whenever tests or visits are necessary, politely ask why. Everyone’s situation is different, but make sure you have a justification for any cost move you make.
See what cash can do: If your insurance won’t cover particular procedures, see if paying with cash can get you a discount with the institution or practitioner.