Out of pocket medical costs continue to rise

Milliman has released their 2011 Milliman Medical Index. The MMI shows that healthcare costs for American families has more than doubled in less than nine years. Furthermore, the average American family of four which is enrolled in a PPO plan paid $3,280 in out of pocket medical expenses in 2010.

According to the 2011 MMI (Milliman Medical Index) is $19,393, which is more than double the $9,235 amount paid for healthcare costs in 2002.  The 2011 figure is $1,319 higher than 2010, and represents and increase of 7.3%. The rate of increase has been slowing in recent years, but the rising cost of healthcare is taking its toll on families.

The MMI is based on families enrolled in an employer sponsored PPO health plan. The employer pays 59% of the total cost, or $11,385 of the $19,393. 24% of the cost, or $4,728 is the employee contribution, which pays the remaining premiums, and is usually taken out of the employee paycheck. The final 17% or $3,280 comes directly out of employees checkbook, to pay for co-pays, deductibles or non covered items.

The amount an employee or family pays out of pocket increased dramatically from 2010. From 2010 to 2011 the increase was 9.2% compared to 6.6% the previous year. This is an important figure for most concerned about the high cost of healthcare. Increasingly, employers are pushing more of the responsibility of paying for healthcare on to their employees. Many now offer only high deductible plans, in an effort to further reduce their costs.

The MMI is broken down geographically as well, with Miami ($23,362), New York City ($22,785) and Chicago ($21,996) having the three highest figures, while Phoenix ($17,336), Atlanta ($18,292) and Seattle ($18,536) have the lowest costs.

Health insurance and car insurance are getting to be more alike

Last month I needed to have my car inspected to get its annual State inspection sticker. As it turns out, the car did not pass inspection and needed some work before it would pass.  Even though I have insurance for my car, I never once thought that the insurance would cover any of the necessary repairs. In this day of increased usage of Consumer Driven Health Plans, health insurance is getting to be the same way.

In order to get a valid inspection sticker, my car needed two new front tires, a new tie rod and stabilizer bar. These repairs cost me over $500.00. I would have loved to have some of the cost of these repairs paid for by insurance, but as most people know that car insurance pays for repairs, not maintenance.

With today’s high deductible health plans, most health insurance is now very similar. You pay out of pocket for small repairs (doctor visits, lab tests, ER visits), but for the big expense items, your insurance will pay. In the not to distant future, the $20 co-pay for a doctor visit will disappear, and people will be responsible for paying the full $150+ fee, at least until their deductible has been met.

The availability of pricing information between the auto industry and the healthcare industry is staggering. When the mechanic told me what the cost would be to replace the 2 front tires was, I quickly pulled out my cell phone and called a large tire chain and got a better price. It is getting easier, but it is still difficult to get pricing information for common procedures. For example most people do not know that it can cost significantly less money to have a MRI done at a stand alone facility rather than a hospital. Furthermore, most times the hospital will not even let you know what is being done, or that you can go elsewhere to have it done. When individuals start paying more for their care, and understand how the system works, they certainly will do more to save as much as they can.

Up and down figures with Health Savings Accounts

The Employee Benefit Research Institute reports some interesting findings about health savings accounts, HSA’s. While the number of individual accounts increased in 2010, the balances of those accounts fell.

The number of accounts increased to 5.7 million, up from 1.2 million in 2006, and the total assets jumped to $7.7 billion. However, the report states that the average account balance in 2010 dropped to $1,355, down from $1,419 in 2009.

Other statistics include:  the average HSA balance increases with household income and the higher the level of education of the account holder, the higher the HSA balance is.

Why has the average HSA account balance dropped? Some will argue that with the current economic conditions, it is more difficult to put money into savings accounts. Others will say that the hsa accounts are being used more often on qualified medical expenses and that the owners are taking care of their health. Still others will say the funds are being used to pay for the excessive costs involved with health care.

It is true that health care costs are skyrocketing and the high deductible health plans associated with HSA’s can lead to higher out of pocket costs for individuals. If it is not possible to put more money into your HSA, the only way to increase the account balance is to decrease the amount which is taken out. The best way to do this is to reduce your medical bills. INSNET has helped individuals save money on their medical bills since 2007. Please visit www.myinsnet.com to learn how we can help you.

Increased use of CT scans can harm you physically and financially

The Los Angeles  Times published an article about the increased use of CT scans in emergency rooms and the harm the increased radiation can cause to the human body.

The story shows that in 1995 there were 2.7 million CT scans performed and that number increased to 16.2 million in 2007.  This represents a 16% per year increase.  The most common uses of CT scans are for patients with abdominal pain, headaches and chest pain. With this large increase in CT scan usage, little research has been done that shows the level of patient care has benefitted.

What is known is that there is a tremendous amount of radiation involved in a CT scan. Dr. Chris Fox, Director of Emergency Ultrasound at UCI Irvine states that the amount of radiation exposure involved in a CT of a persons abdominal region is equivalent to 500 chest x-rays.  “The accumulation of radiation over time can lead to cancer, so it can be risky” Fox said.

CT scans are known for having a wide range of price. This is especially important today as more and more people of paying a higher portion of their health care expenses. Even those in the health care industry have a difficult time knowing how much a CT scan costs.  A study in the Journal of Hospital Medicine surveyed Hospitalists about cost of procedures which involved CT scans. While most knew they cost more than x-rays, they were off on the true cost involved. The most common responses ranged from between $150 – $1,800. The actual price per the survey was $2,204.

There are many factors which contribute to the range of prices found for CT scans, the most common being where the scan was taken. Hospitals usually have the highest price while stand alone facilities are generally lower.

Medical bills and the uninsured

A new report has come out and states that a record number of people have gone without health insurance for at least part of the past year. The report indicates almost 50 million were without insurance, up from 46 million in 2008.

I think there is plenty of room for debate about this actual number, but I don’t think there is much argument that the number has increased in recent years. Over 62% of people with health insurance receive benefits through their employer. If people are losing their job due to the economic times we live in, it just stands to reason there are fewer with health insurance.

Not having health insurance guarantees you of one thing, that you will pay the most when you need health care. Only the uninsured pay ‘sticker price’ on a medical bill. That is because most medical providers have agreements in place with insurance, both private and government sponsored, to make adjustments to the amount they actually collect.  Without the benefit of an agreement, the uninsured is out of luck.

What can the uninsured do when they receive a bill? First, don’t ignore the bill. Talk to the hospital or doctor billing office and ask to set up a payment plan. You should also inquire if they offer a prompt pay discount.

Since most medical bills are generated for the insurance company to pay, they have confusing alpha numeric codes. Without a ‘key’ to unlock what these codes mean, it is difficult to understand what you are being billed for when you receive a bill. Those without insurance have no means to the ‘key’. Patient advocates like INSNET can help. We provide risk free medical bill review and negotiation. A fee is charged based on a percentage of the amount saved on the negotiation. If there is no savings on the negotiation, there is no fee for the review.

Is health care rationing closer than we think?

United Healthcare recently announced that it is joining Wellpoint and Aetna in launching new initiatives to reduce payments made on behalf of cancer patients. While the cost of cancer care is staggering, many see these new measures as rationing of care at the end stages of life.

Under the new plan, United Healthcare will make a one time payment for each patients complete course of treatment of common cancers, such as those affecting lungs, breasts and colon. The purpose of this is to encourage physicians to follow standard treatment regimens instead of trying individualized or unproven tactics, which they say can often involve costly drug combinations.

Under this plan, physicians can choose to administer drugs not included in the treatment regimen they choose, but they will only be reimbursed the actual cost of the medications. This line of thinking leads me to believe that the cost of medications are the major contributor to the cost of cancer care. Rather than have a perceived rationing of care, wouldn’t the insurance companies be better off curbing the amount they allowed on all medications, to an amount closer to actual cost? If insurance companies are contemplating a system close to rationing of care for cancer patients, can a form of rationing for all be far behind?

 

Those enrolled in CDHP’s spend less on medical services

Cigna has released it Fifth annual CIGNA Choice Fund study, which reveals some interesting numbers about their customers enrolled in CDHP’s. The study shows that CDHP customers spend less on medical services and receive equal or better care than those enrolled in a traditional PPO plan. Those enrolled in a CDHP are also more apt to take an active role in their health and are more satisfied with their health care service.

A common misconception of CDHP’s is the reason that costs are lower is because people are not receiving necessary care out of fear of the high cost involved. The CIGNA study points out that this is not accurate. When comparing those enrolled in their CDHP plan versus those enrolled in a traditional PPO plan, 9% enrolled in the CDHP plan had higher use of preventative care services, 87% receive no statistical difference in the level of care and only 4% receive a smaller amount.

When grading their overall satisfaction with their health plan,  83% of respondents were satisfied or very satisfied with their CDHP compared to 82% for all of CIGNA’s other health plans.

Employees will pay more out of pocket for healthcare in 2011

Hewitt Associates has released a study illustrating that employers can expect 2011 health care cost increases to be at their highest level in five years. The study cites higher medical claim costs, aging population and changes brought about by health care reform as contributors to this.

Per employee health insurance premiums will be at $9,821; a $66 per month increase from 2010. Employees are being asked to pay 22.5% of this or $2,209. This employee contribution is up 12.4% from 2010.

Average employee out of pocket costs such as co-payments, co-insurance and deductibles are also expected to increase by double digits. Employees can expect to pay $2,177 in 2011 out of their pocket on medical bills. The total employee contribution of $4,386 per year is three times higher than what they average employee paid, $1,229 in 2001.

Can healthcare learn anything from cable tv?

I subscribe to Time Warner Cable for my television. Time Warner and Walt Disney Co., which owns ESPN and ABC are currently involved in some heated negotiations. Both sides have no issue explaining their side to the consumer.

Time Warner has a “roll over or get tough” campaign. The campaign claims that the networks are demanding enormous increases in fees  to retransmit their product. These fees are mostly passed on to the consumer, but the cable company must realize the difficulty this may pose. Walt Disney Co. also has a campaign where they are informing Time Warner customers of other options to view their product, which include competitors as well as satellite television services.

I came across this article about an uninsured women from Boston arguing about a charge on her medical bill. The woman saw a doctor in an office in a Boston area hospital. Before scheduling the appointment, the woman contacted the hospital and was told a routine consultation with no test or procedures will cost between $200 and $300. When the bill for $233 for the doctor visit came, the woman paid the bill and thought everything was taken care of.

However, she received a second bill for $133 which was the hospital charge for the use of the office space. The article continues by saying that virtually every Boston area hospital charges a separate facility fee, but most patients are not aware of it because their insurance usually takes care of it, without most patients even knowing there is a charge. As this woman has no insurance, she became aware of it quickly.

What would happen if health insurance plans instead of just taking care of these small fees, actually let the patients know that the reason their health insurance premiums escalate each year is because they have to pay fees like this? I’m not sure it would change health care as we know it today, but it would make it more transparent.

Study reveals HSA and FSA users access medical care more often

Opponents of high deductible health plans and HSA’s usually point out that a reason that medical costs decrease is because people do not seek adequate care due to the perceived higher out of pocket costs. This study by the National Center for Health Statistics seems to indicate just the opposite.

The study indicates there is a strong correlation between the type of health plan an individual purchases and their utilization of the plan. Those covered with a HSA and FSA were more likely to get an influenza vaccination(36%) than those without (27%).

The trend continues when it comes to visits to the eye doctor, 52% for those with HSA & FSA compared to 36% with traditional insurance.  The percentage (34%) covered with a HSA and FSA saw a medical specialist, compared to 24% with traditional insurance.

Most will agree that when an individual has a high deductible health plan and a health savings account that they become better consumers of health care, as they are consistently looking for the best way to spend their HSA dollars.