Keeping Costs Lower----and Staying Healthy in an Uncertain Time

By Steve Schulte of
Health Advocate Solutions

Please comment at (213) 999-1227

This time of transition that will last till 2014 when everyone must be covered (assuming the Administration or Congress doesn't exert unexpected leadership before then...) poses some huge problems for both the insured and the uninsured. This blog will address both groups.

As background, there are several important things about the current private insurance market to note and to keep in mind.

First, insurers are already reacting against healthcare reform and its new responsibilities. They are denying more applications in the individual market (about 14 million in this group nationally), denying more claims and raising rates rapidly---especially for individuals. As a licensed agent I see evidence of this almost every day. (Is Secretary Sibelius aware of this?)

Second, the emphasis on high deductible policies is increasing---both for individual purchasers and for businesses buying small group coverage (2 to 50 employees). From 2006 to 2010 high-deductible plans ($1,000 or more per year)for employment-based policies shot up from just under 7% of total plans to just under 20%.

Third, if one purchases a higher deductible plan to reduce monthly premiums one should absolutely consider a health savings account (HSA). Originally a Republican idea that has greater benefits for those with a larger income, this concept now definitely advantages those who want the high deductible-lower premium combination. There are tax advantages in addition to the outright premium cost savings with HSAs.

Fourth, the danger---and trend---with getting a higher deductible plan is that one avoids routine exams and diagnostic tests that make health-sense in order to avoid paying out of pocket. This includes blood panels, colonoscopies, mammograms and so on. The Kaiser Family Foundation, among others, notes this tendency to avoid routine care with some alarm. Is it a sign of what's to come?

If I were to buy an individual policy I would definitely scout for a high-deductible HSA plan. This would require me to set aside an amount of cash (most likely the amount of the deductible) in a private bank that sets up such accounts. I can only use this account for health expenses---including putting my long-term care premium through the HSA.

Then, for all of my medical transactions---deductibles, prescription meds, needed diagnostic tests, doctors visits, and so on---I would use this new account. What I put into the account will be deducted from my taxes the following year, plus I can roll over any unused amount to the following year as well. At age 65 I can no longer use the HSA but I CAN use any unspent funds for longterm care expenses.

This clearly makes more sense than either paying a higher than necessary premium or foregoing the tax advantages an HSA provides.

Just make sure to get the routine visits and any needed diagnostic testing and immunizations. Judge what you may need by knowing your risk factors and family history. Discuss this information with your physician. In this way you can maintain good health and control your medical expenses in the long run.

Remember that the true cost of a health insurance policy is not just the premium and not even the premium + deductible + copays (all out of pocket). It is certainly the latter, but it is also the quality of health coverage benefits you get from your policy. In a word, you are not just avoiding the huge health disaster but are working to stay healthy. Strive to avoid health events that are preventable.

It should also be noted that, in choosing my high-deductible plan, I check carefully to see what I will pay for brand meds, hospital and outpatient visits, specialists---whatever is most important to me in getting coverage. Most high deductible plans will allow for a small number of annual office visits at a very low cost and perhaps will allow both generic and brand drugs with no separate deductible. Soon they will be required by the new laws to offer more preventative services. Just make sure to check before you buy the policy.

For all of these reasons I recommend against buying a policy on-line, no intermediary, just to get the "lowest" premium. Countless sad stories will reinforce why this is a bad idea generally. Get information, yes; buy a policy on-line, never.

So, even in this time of uncertainty when insurance pressures and costs are rising it is still possible to get coverage, maintain high benefits and control costs. Just make sure you do your homework and, preferably,find some expertise to help give you make the right choices.

Sources: LA Times, NY Times, Wall Street Journal, Kaiser Family Foundation, UCLA Center for Health Policy


To respond to this blog, email steve6schul@yahoo.com