Finance

The Cost of Health and Wellness

Nine steps to stretching your healthcare dollars.

Don Milne Jan 2, 2018

The biggest expense in most people’s households is for housing. Often this reaches 25 to 35 percent or more. Most people would guess that transportation would be the second biggest budget item, but that would be wrong.

The second biggest expense in most people’s households is for healthcare. It is a surprising 15 to 20 percent of household income. Many people do not recognize this because their employer may be paying for a majority of the costs as an employee benefit. Even the part you pay for out of pocket can be a significant expense. Is it possible to get the healthcare you need without paying until it hurts?

Unfortunately, a lot of the cost problems of the health care industry are outside of the control of the individual consumer. That said, you can still take some steps that will reduce your healthcare expenses without adversely affecting your health.

1. Consider switching to a high-deductible health plan.

If you are a light user of healthcare services, consider switching to a high deductible health care plan with a Health Savings Account (HSA). Yes, you pay for first dollar expenses 100 percent out of pocket, but your monthly premiums are substantially less. In essence, instead of paying out premiums on medical coverage you may never access, you take the money saved and put it in the HSA and only spend what you need. Healthy people spend much less on annual medical coverage when making this choice.

2. Shop around for the best prices.

The same medicine often costs a different amount at different pharmacies. Going generic can also save you money. Medical procedures are also surprising varied in cost depending on location. For example, some hospitals may charge more than $3,000 for an MRI, while a clinic that specializes in MRIs might charge $400.

3. Stay in network.

Make sure your doctor only refers you to specialists and labs in your network. Out of network physicians and labs don’t count towards your deductible and don’t give you discounts.

4. Practice “watchful waiting.”

Medical schools teach something called “watchful waiting” because problems like coughs, back pain or rashes often resolve themselves over time. This practice doesn’t make money for healthcare providers so many are more than happy to order tests and treatments that may not be needed. The healthcare industry spends $15 billion a year on advertising hoping you will see something you will decide needs urgent treatment.

5. Compare prices.

Hospitals don’t all charge the same prices. Your insurance provider should be able to give you some price comparisons. It is not uncommon for an operation at one hospital to charge double what the same operation costs at another hospital and it is not always due to quality reasons.

6. Read the fine print.

Hospitals are going to make you sign a document accepting financial responsibility for charges not covered by your insurance. Lawyer Olga Baker adds this language to the form: “consent is limited to in-network care only and excludes out-of-network care.”

7. Get it yourself.

When checking out of the hospital, don’t take home basic equipment and supplies that are “covered by insurance.” You can expect to pay up to 10 times or more. Get it yourself at the pharmacy or medical supply store.

8. Choose a healthy diet.

A healthy diet will go a long way to reducing the chances you will need to visit the doctor in the first place. Fixing your own food at home allows you to pick the healthy foods you enjoy and you save a lot of money compared to eating out and settling for food choices that are less healthy.

9. Get moving.

Gym memberships don’t have to be very expensive, often you can sign up for as little as $10 a month. If you don’t find exercising your favorite thing to do and would rather watch Netflix, why not do both at the same time?

These steps may seem like a big hassle, but in 21st century America, you can’t afford to be underinformed about how to spend your healthcare dollars. Those who are not proactive will overpay for healthcare. 

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