Why Medical Costs Keep Going Up and How To Deal With It
This is the time of year when employers may announce price changes in health insurance for the next year.
In many cases, employees are likely to see their health care costs increase once again. Forbes magazine reports that over the past 10 years, health insurance premiums have increased 69 percent while real personal income has grown 21 percent.
Health care costs are taking a bigger share of consumer pocketbooks, but the average consumer is paying 6 percent of income for health care while the country spends an average of 18 percent. Who is paying the difference? That would be employers and government. When people don’t pay the full cost of a product or service, they may be less likely to be careful spending someone else’s money.
Another cause for increasing medical costs is our aging population. Older people need more health care, so the growing population of older people means higher costs. Another trend affecting medical costs is increasing obesity rates. Obesity brings with it many costly medical treatments that raise insurance premiums for everyone.
There are also economic reasons that contribute to higher prices. Our health care system rewards providers for services, not results. The more tests and procedures provided, the more can be billed regardless of the results. We also have more people with health insurance than ever before. Insurers have to cover preexisting conditions. Caps for expensive insurance coverage have been removed. These are good thing for getting medical care, but it comes at a cost. As people take advantage of these options, costs go up.
According to Steven Brill’s bestseller American’s Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System, drug companies, hospitals, and trial lawyers have all taken advantage of the current system to create great profits courtesy of effective lobbying.
Business leadership guru Steven R. Covey said, “I am not a product of my circumstances. I am a product of my decisions.” While individuals are not able to change our broken health care system, we can make decisions to reduce our out-of-pocket costs and help drive overall costs down.
- Get in Shape. Healthier people don’t require as much medical care. Modern science is combining with smart phone apps to give people the tools they need to measure and motivate. So, if you like binging on Netflix, why not do it while working out at the gym?
- Choose a High-Deductible Health Care Plan. Premium increases have really socked it to users of traditional health care plans — resulting in monthly premiums of $500, $800, perhaps over $1,000. That’s money lost, whether you visit the doctor or not. If your employer offers it, consider choosing a high-deductible health care plan with an accompanying health savings account (HSA). You will probably see your premiums drop by 80 percent or more compared to a traditional plan, and you can move the rest of your money into your HSA tax free. If you don’t use it, you keep it. This is a great option for people with infrequent health care needs.
- Price Shop. Find out what stuff costs and get the best deal. When people don’t care about the cost because “insurance will pay for it,” it only results in higher premiums for everyone. Prescription drugs are an area where shopping around can save you big time. Consider looking into mail order options or using a price comparison app like GoodRx. Hospitals charge different rates for the same treatments. Ask your doctor which ones he or she works with and pick the one with the best price.
The old saying “when life gives you lemons, make lemonade” is good advice. You can make decisions that can make you healthier and make sure you don’t spend more on health care than you need to. The more people who do this, the more health care costs will stay under control.