Navigating the complex world of healthcare feels nearly impossible for many Americans. Recently, the onus of understanding, managing, and paying for healthcare costs has been increasingly transferred to patients, forcing people to become healthcare consumers by default. Important financial decisions are being made with little to no knowledge of how the labyrinth of modern healthcare works.
The impact of these decisions is significant. Today, almost 10 percent of the typical American’s income is spent on out-of-pocket healthcare expenses. That number has nearly doubled from just 10 years ago, according to Deloitte. This trajectory shows no sign of slowing down.
Increases in medical expenses to the consumer are the result of the rising cost of healthcare and the fact that in the most common plan designs, the patient now shares a greater percentage of the total cost with the plan sponsor than they may have in the past.
Increased plan premiums, higher deductibles, constant increases in the cost of medication, and more expensive procedures all combine to make healthcare very expensive. It is more important than ever that we as consumers engage in the management of our healthcare financial responsibility for the present and future.
Understanding the challenges at hand, how can Americans take back control to successfully manage their healthcare expenses?
Be proactive and make a plan: Most people tend to view healthcare as a reactionary, transactional expense. That is, dealing with it as it comes up versus planning for it and proactively managing it. We should plan for our healthcare needs and subsequent costs, just as we save for our children’s college education or our retirement.
Understand the options: It seems obvious, but strategically selecting your health plan is one of the most important decisions you make when it comes to managing the cost of your healthcare. If your employer offers a traditional PPO and a high deductible HSA eligible plan, your unique needs will determine which plan makes more sense for you. Don’t fall into the trap of selecting the lowest premium or simply going with what you had last year. This approach may cost you much more in the long term if you or your dependents require more than the annual wellness event.
Take advantage of HSA or FSA: Funds in these tax advantage accounts are excluded from taxable income, so it makes sense to take advantage of them. Use these accounts to pay for healthcare expenses with pre-tax dollars or better still, if your financial situation allows it, elect an HSA eligible high deductible plan and maximize your contributions for the tax benefit, but pay any out of pocket expense from other sources or funds. You will end up with a safety net of savings set aside if you do incur large, unexpected medical bills in the future.
Use an in-network provider: Always make sure that your healthcare provider is in a network. Unfortunately, this has become a much more complicated challenge in recent years. The breadth of your network can be much more difficult to define in modern plans, and narrow networks are becoming increasingly common. For example, it is not uncommon to find that your General Practitioner is in network, but it’s associated Radiology department falls outside of your coverage. The cost disparity between in-network and out-of-network providers can be quite substantial. Seeing an in-network provider can be the difference between paying your deductible and paying for everything OOP.
Price compare for your care: Realize that the cost of care may vary by provider, geographic location, and network coverage. Take advantage of the price transparency tools offered through your health plan. These tools let you shop for healthcare based on the price. You can compare the cost of a procedure at different providers while taking quality into account. This is especially useful for planned, higher-priced procedures that allow some time for research before you must proceed.
Review your medical bills and explanation of benefits (EOBs): These documents are notoriously complicated and many people find them difficult, if not impossible, to understand. Estimates on the percentage of medical bills that contain errors or overcharges range from 60 – 90%. Chances are pretty good that your bill may contain a savings opportunity, and it is your right to question and or challenge medical bills.
Utilize wellness benefits and financial incentives: Explore all wellness benefits, health risk assessments, and/or disease management programs that you’re offered, particularly those that have financial incentives, such as premium reduction. At the end of the day, healthy people will pay less for healthcare. If you are able to improve your health and directly impact medical costs like your premium, it stands to reason that you should take advantage.
The inevitable transformation to a consumer-centric healthcare model means we must retrain ourselves to be informed health care consumers. We need to pay attention and participate in benefit decisions that have not had a direct impact on our daily life or household budgets in the past.
This requires all stakeholders in the healthcare industry, whether health plans, employer groups, government agencies, providers or patients, accept this change is underway and place a renewed focus on understanding the system and improving the consumer experience. Providing visibility, price transparency and guidance throughout is the first step to a more engaged healthcare consumer and an engaged consumer is essential to creating sustainable infrastructure in the industry.
Building a new model demands change to the current service delivery and pricing. The industry must nurture consumers to be actively engaged and highly autonomous when it comes to healthcare decision-making. Consumers need to understand what is at stake for physical and financial health, as it is clear that the time for passive participation in healthcare is a thing of the past.
Thomas Torre is it chief executive officer at Copatient. A technology enabled medical expense management company.
The views expressed by contributors are their own and are not the views of The Hill.
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