By Chuck Smith-Dewey
“Why are my health insurance costs going up at a rate that is so much higher than inflation?” Experts say there are no easy answers, but there are straightforward explanations.
Insurance companies work within fixed and highly-regulated operating margins, and premium increases are a “pass-along” expense from rising doctor, hospital and other medical costs.
We’ve come a long way since horse and buggy days, and nowhere is this more apparent than the high tech world of medicine. Major advancements, such as MRIs, are now common procedures, and special operations like fetal surgery and organ transplants are no longer rare. There are many major improvements in health care, but all come with major price tags.
Every day there are breakthroughs that allow more lives to be saved, and the quality of other lives to be improved. But we all share in the cost of developing these breakthroughs.
In America, we go to extraordinary means to save lives that other countries would let expire. In Britain, for example, the national health care system has denied transplant surgery, blood dialysis and other expensive treatments for patients over a certain age or those who are in very poor health.
The “rescue” of premature babies under 27 ounces is routinely attempted in the United States, at a cost of more than $120,000 each. In other countries, those babies would die.
Americans will go to heroic means to save lives without regard for the financial cost on society.
About one-third of the cost is that dreaded old “I” word: Inflation. Medical care is not immune to it. Across the United States the cost of goods and services is rising as the inflation rate rises to meet higher labor costs, professional fees and operating overhead.
The U.S. already spends more than $2.4 trillion a year on health care, as of 2008.
The cost for drugs makes up an ever higher portion of rising health care
costs. A recent study of data from the Health Care Financing Administration found that seniors pay twice as much for prescription drugs as they did just eight years ago. Pharmaceutical companies claim they need to charge higher rates for new drugs because of higher research and development investment costs, along with the costs of testing and the approval process.
As more people are treated in outpatient settings, hospitals must spread their brick and mortar costs over fewer patients. Hospitals compensate by charging more when you are in the hospital.
Emergency rooms – one of the most expensive treatment options – report more than a million admissions from assaults every year. Thousands of drug-exposed babies are born every year that require extraordinary high costs. Almost one million teens become pregnant every year. Teenage girls are more likely to have premature births and other complications. All these social problems contribute to higher medical prices across the board.
- and shifting of costs raises your premiums
In recent years, our federal and state governments have shifted billions of dollars in medical costs from Medicare/Medicaid to the private sector. In some cases, the federal government reimburses hospitals and doctors for Medicare and Medicaid, less than 50% of what private insurance pays. However, to make up for the difference, health care providers make up for the government’s underpayment by shifting more of the cost to their billings to private insurance. Cost shifting has been a major cause of higher insurance premiums, particularly in the individual and small business insurance.
The cost of providing health care for those who won’t pay, or can’t pay, is rising dramatically. As the number of uninsured people continues to climb, there is a direct increase in the cost of uncompensated care to hospitals, which in turn shift the burden of this “indigent” care cost to those who have private insurance.
The cost of treating people over the age of 65 is four times higher than thcost of treating the rest of the population. In the year 2010, the first wave of the nation’s 77 million baby boomers, those born between 1945 and 1965 will begin to retire.
New treatments to help people with chronic illnesses like AIDS and cancer are making a huge difference in helping people to live longer and even defeat their diseases. But the treatments add costs to the insurance
system. New drug treatments for AIDS/HIV can add between $10,000 and $20,000 per year per patient.
Malpractice insurance costs billions for physicians and providers. Unnecessary tests, performed solely to protect doctors from liability add to the exploding costs of “defensive medicine”. The U.S. Office of Technology Assessment in a recent study estimated that about 8% of diagnostic testing is “consciously defensive”. An article on the American Academy of Orthopaedic Surgeons Web site estimates that “defensive medicine costs the U.S health care delivery system about $100-178 billion per year”. Those costs are passed on through higher doctor bills and hospital bills.
Your doctor or the office manager who handles billing will probably be flexible, provided you make a valid case. When one woman in Texas was charged $900 for surgery and “consultation,” she explained that she had visited the hospital just once, for surgery; her bill was promptly cut by $70.
Several services have a medical bill “auditing” system that evaluates your medical bills to determine if errors occurred in the billing process. Considering that 97 percent of hospital medical bills contain errors, it’s no wonder why out-of-pocket medical expenses are on the rise for consumers. Because the typical hospital bill is extremely complicated, often containing several hundred line-item charges, there is ample opportunity for computer mistakes and accidental human error. If Health Allies finds these errors in your medical statement(s), they will collect the money owed to you.
Do a Google search for “medical bill auditors” to find companies offering this service.
Keep all your medical bills together and add them up at tax time. If they exceed 7.5 percent of your adjusted gross income, you may deduct the excess. If, for example, your adjusted gross income is $20,000 and your medical bills equal $2,000, you may subtract up to $500 off your federal taxes ($20,000 x .075 = $1,500). Any amount above $1,500 may be deducted.
Please note that these items also may be included in the total: the cost of eye glasses, contact lenses, physical therapy, x-rays, hearing aids, psychiatric care, insurance and transportation to the hospital or doctor’s office (at 10 cents a mile). There are phase-outs in some cases based on adjusted gross income. Check with your professional tax adviser for specifics.
The Earned Income Credit is a Federal tax credit for working families, with or without children, who meet certain income guidelines. Eligible families either pay less Federal income tax or get a larger tax refund. To qualify for tax year 2007: workers with no children must have earned income below $12,590; workers with one child must have an earned income below $33,241; and workers with two or more children must be below $37,783 in earned income (Please note: the limits are $2,000 higher in each category for those filing a joint tax return). Claiming the EIC will not interfere with your eligibility for benefits such as TANF, Medicaid, SSI, food stamps, or subsidized housing assistance. Immigrants legally authorized to work may also claim the EIC.To find out if you qualify, complete an Eligibility Check.
Your Daycare calls and explains your child is crying and complaining of earache pain. You call your family physician and she is already booked for the day, and the next appointment isn’t available until tomorrow. You decide to choose between the hospital emergency room and one of the new no-appointment ambulatory care centers, or “emergi-centers,” that many larger communities now have. In most cases, it will be cheaper to go to the emergi-center. You will probably be charged a flat fee, based on the diagnosis. At the hospital emergency room, you might be billed twice, once by the hospital and once by the doctor. In any emergency, consider the distance you may have to travel for proper care. If the emergi-center is located 30 miles farther than your local hospital, the emergency room may make more sense – and offers greater comfort.
You could save thousands of dollars by being able to recover at home, and increase your comfort dramatically. There are at least three basic kinds of home health care: subsidized homemaker services, Medicare-certified home health care and private home health care. Check your insurance policy to see which service you’re covered under, based on different circumstances.
Hospital costs vary widely, especially between urban and rural facilities. If your doctor has admitting privileges at more than one hospital, find out if you can be admitted to the one that’s less expensive. Keep in mind that hospitals operated by non-profit foundations are usually less expensive than investorowned, for profit hospitals. To find out how much your local hospitals charge, ask your doctor or employer. Many states have Health Services Cost Review Commissions, which compile such data.
In the admission offices and emergency rooms of many American hospitals, a little sign reads, “NOTICE – Medical Care for Those Who Cannot Afford to Pay.” This sign indicates that the hospital provides free or subsidized care for low-income families. In 1946, the United States Congress distributed millions of dollars to hospitals and other health care facilities for expansion and modernization. In return, these hospitals agreed to provide a “reasonable volume” of free services. This is known as the Hill-Burton Program. To receive care under Hill-Burton, you must file an application at a participating hospital and present proof of your income. Families earning below the federal poverty line automatically qualify for free care, but some hospitals also provide subsidized care for families earning up to twice the poverty level. Not all hospitals, however, participate in Hill-Burton, and not all services are covered. The program only pays hospital bills, not doctor bills. If you have other forms of health insurance, you may be ineligible. For more information and a list of participating hospitals in your area, call 1-800-638-0742.
Don’t see a doctor for largely untreatable ailments such as cold, upset stomachs, or occasional fatigue. All you’ll get is reassurance to do what you’re already doing: stay home, rest, take aspirin and drink fluids. Have questions about how to treat yourself? Contact a nurse-on-call service or local clinic. The average cost of routine doctor visits is about $75. However if these symptoms persist, see a doctor.
You and your entire family can save hundreds of dollars by taking advantage of the many free screenings, immunizations, and other health clinics offered by your local community or a town near you. Numerous community hospitals and social services can provide blood pressure checks, shots for your children, free contraceptives and/or advice, and other preventative health care at little to no cost.
As mentioned before, it pays to shop around – health care specialists are subject to the same kind of scrutiny that we routinely give any other provider
of services. Take the time to call several clinics, and gather advice from friends and neighbors. Some local hospitals offer free doctor referral services, matching the patient’s needs with the proper specialist. They often will know standard fees also. If you’re seeing a specialist, ask the referring physician what the fair fees should be. Or call your county medical society.
Believe it or not, your chance of undergoing an expensive surgery or preventative procedure may depend solely on where you happen to live. Statistics show that the frequency in which certain medical procedures are performed varies widely from location to location. For example, residents of New Haven, Conn., are twice as likely to undergo a coronary bypass operation as residents of Boston, Mass. What’s the reason for this discrepancy? One Dartmouth Medical School expert, John E. Wennberg, M.D., M.H.P., explains that certain operations are simply more fashionable in some parts of the United States than others. So, if you plan to get a second opinion prior to surgery, consider going to a specialist in another city. In addition, try to find out what the surgery rates for your procedure are in different cities. To get the names of second-opinion doctors in your region, call the U.S. government’s toll-free second-opinion hotline at 1-800-638-6833.
As you make arrangements for a second opinion, ask your doctor to send copies of your medical records, x-rays, and lab tests to the second-opinion doctor. These tests don’t need duplication; your second doctor will have the information he or she needs – and you don’t pay double.
If you move out of town or need to switch dentists, your new dentist will want to have current x-rays of your teeth and gums. You may be able to eliminate the cost of taking new x-rays by asking your previous dentist to send your most recent x-rays to the new dentist. These x-rays can cost $20 for the bitewings and $50 for the whole mouth. Practicing good oral hygiene also can cut down the frequency of taking dental x-rays. By properly brushing and flossing and by having regular check ups, patients can reduce the number if x-ray visits to taking bitewing x-rays every two years and whole mouth x-rays every three to five years.
If you are thinking of starting a family, contact your agent to make sure your insurance policy includes maternity benefits. . . or, it may be wiser to start saving for the cost of a routine pregnancy. The cost of a well-baby delivery may range from $2,000 to $5,000. If there are any complications, most insurance plans begin to pay the expenses. Check what your plan will cover. It may be more economical to forego full maternity coverage, which can cost $200 to $500 per month and has waiting periods. Then save the extra money each month and shop for the best, most effective care. But whatever you choose, don’t skip routine and regular visits to an obstetrician during pregnancy.
Studies have shown that women over the age of 40 need yearly mammograms to detect cancerous masses or cists. The cost of mammograms is covered by insurance, and many hospitals offer incentives programs at lower rates to encourage women’s health. The early detection of a mass can avoid thousands of dollars in surgery and recovery. If a mass is detected, most offices/hospitals perform outpatient surgery, saving in overnight hospital fees. In addition to yearly check-ups, home breast exams are part of the process in achieving good health.
Exposure to the sun can cause serious damage, leading to dermatology visits for discoloration to skin cancer. We receive most of the sun damage to our skin as children. Reducing your child’s unprotected exposure to the sun will help to decrease the chance of premature aging and reduce the risk of skin cancer. Sunlight can actually change the color of your skin permanently, leaving a “blotchy” effect. And one bad sunburn can cause skin cancer. Always cover your body in the sunshine and invest in SPF 30 sun block for those family outdoor events.
Many tests have shown that smoking mothers deliver more premature babies. The costs of delivering an infant prematurely skyrocket when compared with the costs of a normal delivery. These increased costs include the need for special incubators, heart monitors, and respirators. In addition, children born prematurely may require more health care during early childhood.
Your mental health is equally important as your physical health. Do you have blue days once in awhile, or struggle with gray winters? St. John’s Wort, an over-the-counter herbal supplement, has been proven to increase positive moods. Before rushing to your family physician for medication to make you feel better, try supplements with a combination of expressing your feelings with friends and a healthy lifestyle. Mood stabilizers are some of the most costly medications on the market today. However, you should be aware of the signs of stress or even depression. Give yourself a simple screening test:
• Do you have feelings of sadness and/or irritability?
• Has there been a loss of interest in pleasure activities you once enjoyed?
• Have there been changes in your weight or appetite?
• Have you noticed changes in your sleeping pattern?
• Are you feeling guilty?
• Having problems concentrating, remembering, making decisions?
• Are you fatigued or have a loss of energy?
• Do you experience restlessness or decreased activity noticed by others?
• Do you have feelings of hopelessness or worthlessness?
• Do you have thoughts of suicide or death?
If you answer “yes” to any of these questions, consider consulting your family physician. If they recommend mental health treatment, it is more cost-effective to have your family physician prescribe mood stabilizers instead of seeing a psychiatrist. However, follow your doctor’s instructions on counseling and referrals to mental health professionals.
Many hospitals are looking for ways to promote their maternity wings, and offer a variety of incentives to new families, including free lease of infant car seats, baby clothes, special sibling programs, and overnight stays for the father and siblings. Take advantage of these special services.
There are many discount prescription drug benefits available for a modest cost. Communicating for America offers a free prescription card through PCS. This program saves its members up to 40 percent at over 55,000 pharmacies nationwide. On average, CA members save $9.39 per prescription order.
Medicine marketed under its scientific name is usually 50 percent cheaper and just as effective as brand-name versions. In addition, look for generic drugs in the medicine you purchase over the counter. For example, 100 generic aspirin may cost $1.79; the same ingredients packaged under a well-known brand name can cost more than $5 for 100 tablets. Consider, also, just how important the new easy-to-swallow products are to your comfort. The lesser price of some medicines may be comparably easier to swallow when thinking about your budget.
When your doctor prescribes medication for you, understand exactly what it’s meant to do and for how long. For example, you may receive two prescriptions for an earache: one is antibiotic and a painkiller. If you have little or no pain, you may opt to forego the cost of the painkiller this time.
Find out how much medication you really may need. Make sure your doctor doesn’t order you more medicine than is necessary. If it is a new drug, you may want a small amount to test for effectiveness and possible side effects before ordering large quantities.
When you come down with a cold, understand that all those cold remedies lining the shelves do not cure the cold – they simply ease the discomfort of your symptoms. Take an over-the-counter product if you’re truly uncomfortable, not to find a miracle cure.
Take some time to educate yourself about the various vitamins and minerals you may need. Armed with that information, take a trip to your local pharmacy – or even better – health food co-op, and look for that vitamin or mineral in its purest, and cheapest, substance. Looking for a supplement to prevent osteoporosis? Calcium rich antacids offer the same amount of milligrams as supplements at a fraction of the price.
For determining ovulation, a woman can greatly improve her chances of conception beyond the basal temperature chart by purchasing a new test kit that indicates when ovulation is imminent. At costs ranging between $20 and $55, these kits are expensive, but may save the costs of fertility clinics, which canrun in the thousands of dollars. Pregnancy tests are abundant, and they arenow more than 95 percent accurate. These tests can save several trips to the gynecologist’s office during those anxious months awaiting conception. For about $7, a colorectal cancer home test can be purchased to check blood in the stool. A similar kit at the doctor’s office costs twice as much. In all these cases, you may want to touch base with your doctor over the phone or in person for his or her professional assessment of your condition.
Information is power. The more you know about your Medicare benefits, the more opportunities you’ll have to save money within the system. Medicare is a federal health care insurance program for those 65 and older, and some disabled people. Health care providers bill Medicare for your services, then they bill you for what Medicare does not pay. The Medicare system has two parts.
Part A: (hospital insurance) covers hospital room, board, general nursing and other related services; hospice, home health and limited nursing home costs.Seniors pay no premium for Part A, but they do pay a co-payment.
Part B: (medical insurance) covers inpatient and outpatient physician services, diagnostic tests, physical and speech therapy, home health care, medical supplies, ambulance and other services. Participants pay a monthly premium,which is deducted from their social security checks. Again, participants are responsible for a co-payment – generally 20 percent.
Though you may need to travel farther to locate a doctor, you can minimize the expenses you’ll pay for medical attention by finding a doctor who agrees to accept Medicare payments, along with your co-payment, as payment in full. Time is also money, and you’ll save plenty of time by finding a doctor who accepts Medicare. In many cases, participating doctors will handle all the Medicare claims paperwork themselves. If you go to a nonparticipating doctor,you’ll have to file the claims yourself.
If your Medicare reimbursement comes in less than the doctor’s bill – leaving you to pay the difference – you don’t have to pay without a fight. You canappeal to Medicare and may have reimbursement changed. According to one statistic more than half of Medicare recipients in Maryland who filed appeals received more money from the government. To file an appeal, call your localSocial Security Administration office for the correct forms, which you must filewith your insurance carrier.
A common misconception is that Medicare pays all medical bills for seniors. It does not cover outpatient prescription drugs, care outside the U.S., dental care, checkups, routine foot care, glasses or hearing aids.
35. Look for medical equipment discounts
Some medical supply houses offer discounts to people over 65. If you need medical equipment not covered by Medicare, including transfer benches, bathroom handrails or shower seats, these discounts – from 10 percent to 40 percent – can really pay off.
You won’t save money by substituting the old, leftover prescriptions on your bathroom shelf for your new prescriptions – even when they’re the same medicine. Medications carry expiration dates for good reason. Ignoring them could cost you plenty.
This alternative to a nursing home offers a warm, caring environment within one’s own community, among other seniors. It prevents loneliness and provides great opportunities for cost savings, plus each member of the home feels a sense of independence and contribution to helping each other. Often, these homes are jointly sponsored by a community housing project or nonprofit organization. For more information about group living for the elderly,
call or write to the following:American Association of Retired Persons
601 E Street NW
Washington, DC 20049
Another way to remain at home and in your community is to spend the day at the new private nonprofit senior day centers. Services there include social and educational activities, nutritional care, free health screening, dental and hearing check ups, and companionship with other seniors. At many centers, transportation is provided from home and back again in the evening. To find out more about these subsidized social programs, call your community’s social services agency.
Often for the healthy family, the number of visits to the doctor totals less than $250 a year, a normally low deductible rate. This low deduction rate, however, can end up costing you more in the form of higher premiums. If your family has enjoyed good health for a number of years, you may want to switch to a higher deductible of $500 or $1000. You’ll notice greatly reduced premiums.
You avoid the service fee and may also receive a discount from your insurance carrier. Check with your insurance agent about how much money you can save if you pay your premium one time during the year.
As our health care system continues to change and the technology and research into new arenas rapidly expands, your health insurance policy will meet these changing demands. Carefully review your policy to make sure it matches the needs of your family. Read the fine print: for example, your policy may require that you seek medical attention for an accident within 72 hours or it won’t cover you. You may also be pleasantly surprised to find that your policy covers an illness or procedure that you never knew it did.
Supplementary policies for cancer insurance often may not be needed because you’re probably already covered under you existing health insurance plan.Check to make sure your limits for hospitalization and treatment of cancer seem high enough; if they seem too low, try to change your policy.
About half of individual policyholders lack this important provision, according to insurance experts, who recommend a major medical policy with a stop-loss clause limiting policyholder payout to $2,000 or $3,000.
Know the services that your health insurance policy does and does not cover. If in doubt, file a claim anyway. You’ll get a simple answer back in the form of a claim acceptance or rejection.
Save every document that relates to health care, including invoices from the hospital, pharmacy, clinic, or doctor, plus any correspondence from the insurance company. Make sure you make photocopies of every bill you submit with a claim in case they’re lost.
Feel free to get some help if you need it when filing a claim. Call your local insurance agent, or ask a friend to help. If you have a question about Medicare, don’t hesitate to contact the local Social Security office.
Invest in your health by becoming information-rich. Read publications about health care. Pay special attention to free wellness publications like Inside Mayo Clinic at http://www.mayo.edu/healthinfo/public.html. Or have on hand a book on medical self-care, like The AAFP Family Health and Medical Guide and The Merck Manual of Diagnosis and Therapy. A wealth of information is also available on the Internet.
Once again the U.S. Government comes through by providing a number of tollfree health care information phone services. Topics are numerous, including hearing aids, cancer information, Alzheimer’s disease, drugs and pregnancy issues. For information on the health topics and phone numbers, call the National Health Information Center at 1-800-336-4797.
48. Take advantage of free health advice
For free information booklets from the U.S. government about nearly every health care topic you can imagine, simply write to the Consumer Information Center in Pueblo, Colorado. The government offers several dozen booklets on topics ranging from nutrition, medical problems, mental health, to drugs, exercise and weight control. To receive a catalog explaining these booklets, write to:
Consumer Information Center
PO Box 100
Pueblo, CO 81009
www.pueblo.gsa.gov (you can download booklets from this site)
If you or a family member have a car accident, numerous studies show that seat belts often can protect you completely, and in severe accidents, can save your life. Seat belts not only save your life and your body from injury; they also save you substantial dollars. In one Massachusetts study of hospitalized autoaccident victims, those who hadn’t buckled up paid an average of $1,253 in hospital bills, while those who had buckled up paid only $556. Added savings also come from your auto insurance, which charges you more if you do not wear a seat belt.
Proper treatment of various accidents may reduce the number of visits to the doctor, and can save lives in an emergency. It’s important to always keep an updated medical kit in your home or office.
Here are the basics for your first-aid kit:• a roll of 3 inch wide gauze,
• individually packaged 4 inch sterile gauze pads
• a roll of 1 inch bandage tape
• butterfly bandage tape
• elastic bandages
• cotton swabs
• sterile dressings or towels
• pain reliever (acetaminophen or ibuprofen)
• anti-inflammatory medicine (ibuprofen)
• ipecac syrup (to induce vomiting when advised to do so)
• hydrogen peroxide
• skin creams, hydrocortisone, calamine and bantibiotic creams
• an antihistamine (diphenhydramine for allergic reactions)
• arm sling
• tongue depressors (to be used as a finger splint)
• ice pack
• rehydration fluids (Pedialyte, Infalyte etc.)
Every year, far more people are killed in accidents right at home than in car accidents. A little money spent on accident prevention can save thousands of dollars – and possibly the lives of family members. To prevent falls, make sure the stairways are adequately lit, with nonskid stair surfaces and handrails. Bathtubs should have no slip surfaces or bath mats, and rugs on the bathroom floor should have nonskid backings. Area rugs throughout the house should have nonskid backings or should be anchored to the floor with double sided or masking tape.
Here are some tips for preventing fires. Have smoke detectors on each floor and in hallway, 10 feet from bedroom doors. Never store gasoline or highly flammable liquids inside your house, and keep a fire extinguisher on every floor. Purchase a carbon monoxide detector for your home to alert you of poisonous gases. Watch space heater use, carefully. To prevent any poisoning, keep medicines and cleaning supplies where children cant reach them. Keep all medications in their original containers, and don’t give prescription drugs to anyone other than the person they were prescribed for.
Each year, millions of people suffer painful back injuries. You can save hundreds or even thousands of dollars worth of doctors’ or chiropractors’ treatments by following these tips to avoid back injury:
Bend at the knees when lifting heavy objects.
Keep within the recommended weight range for your height and build. Any extra weight – especially in the stomach area – can put undue strain on your back.
Take charge of your health by making simple changes in your lifestyle. By
following these seven basic rules of good health, you’ll improve your chances of living a long, healthy, active life.• Get eight hours of sleep per night.
• Eat breakfast every morning.
• Cut down on snacks between meals.
• Keep within 10 pounds of your recommended weight range.
• Exercise aerobically at least 30 minutes three times per week.
• Don’t smoke.
• Don’t drink more than two alcoholic beverages per day.
• Take recommended dosages of vitamins and supplements.
Editor's Note: Opinions expressed on these pages are those of the individual author(s) and do not necessarily reflect the views of the management or ownership of healthinsurance.org.
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