Before we begin, let’s review 4 points:
- Insurance carriers aren’t in business to lose money. United Healthcare reported $163.3 billion of revenue in 2017.
- There is no such thing as free healthcare. Wouldn’t it be great if you could get BOGOs at your clinic?.
- This year’s insurance premiums are mostly based on last year’s claims
- More than half of Americans (57%) have less than $1,000 in their savings accounts according to a 2017 GOBankingRates survey. Don’t have to feel alone!
Those four statements were running through my head as I read an article on making the most of a high deductible health plan. The article at first glance made some sense. The main premise was that if you are facing a surgery or similar healthcare situation that will bring about significant medical bills after you’ve hit your deductible, then why not pile on the medical services during that same year. After all, once you’ve reached your deductible, the rest of the year you get free healthcare, right? Well, not so fast.
It’s important to understand that a HDHP is a health plan with an annual deductible of at least $1,350 for self-only coverage or $2,700 for family coverage. According to point #4, that means 57% of us can’t afford our HDHP since we have less than $1,000 in savings. Then, remember point #3 – insurance companies don’t lose money in the long run. Therefore, if medical claims exceed premiums this year, the insurance companies will increase premiums next year, meaning either your monthly premium will increase, your deductible will increase or both.
Now let’s “follow the dollar” through this scenario. According to the Business Insider, the average cost of having a baby in the US is $10,808. Let’s say you have a $3,000 deductible, so you will obviously blow past it with the birth of your precious one. Once you hit $3000, your insurance carrier will then pick up the remainder of the balance and any of your healthcare that follows in that plan year is “free”. Therefore, you either decide to have some unnecessary medical procedures or you have needed procedures and don’t feel the need to price shop since you don’t have to pay anyway. Sound reasonable? Yes, according to the article I read. However, what happens next year to the cost of your healthcare? According to the annual Kaiser Family Foundation Employer Health Benefits Survey, insurance premiums have continued to rise ever since they began measuring them in 1999, so most likely, that’s your answer.
According to Benefitfocus, a benefits technology and services firm, 70% of large employers offered at least one HDHP either in addition to a traditional plan or exclusively as a full replacement for traditional coverage. Here’s the conundrum: most of us can’t afford our high deductible plans now and are hearing messages that if the unfortunate happens and we do exceed our deductible in a plan year, the remainder of the year is “free”. This sets us up for a downward spiral for the next year and so on and on and on.
What is the answer – earn more and save more? That sounds great but unfortunately is not always possible. What is possible is to learn how to be a savvy medical consumer by increasing your healthcare literacy. Learn how to compare costs when it comes to pharmaceuticals and medical procedures. Learn how to find quality care in your network. If you are among the 57% that has limited savings, ask the doctor or hospital for a low- or no-interest installment plan and always ask whether a less expensive, alternative treatment is available. Remember, healthcare is a consumer good and we need to treat it as such. The good news is that it isn’t hard, The Definitive Guide on Increasing Employee Healthcare Literacy will show you how.