Why Is Healthcare so Expensive
When you get sick, you don’t have to choose between medical care and rent. Medical expenses are no longer reasonable for 25 percent of Americans and are getting worse every year. Expensive insurance and unexpected medical bills are a potential ticket to bankruptcy, and you have little energy to protect yourself.
It’s not just you: healthcare costs more every year
There isn’t one bad guy here. Health care costs rise every year for a variety of reasons, from boring to scandalous.
For example, there is a new move towards insanely expensive drug prices, such as the $ 84,000 drug for hepatitis C, which alone accounted for a 13% increase in drug spending in 2014. Many “specialty” medicines were born when manufacturers realized they could charge any price. to want. Expensive drugs are mostly paid for by insurance, and pharmaceutical companies love this : patients get free or cheap drugs, and the insurance company pays giant bills. Of course, this means that we all end up paying high premiums for it.
Hospitals have also raised prices by absorbing their competitors . If every hospital in your area is owned by the same giant company, you won’t be able to close the deal by going elsewhere. Some hospital systems even have their own insurance policies, which can lower their costs, but not necessarily lower your premiums .
Your dollars don’t necessarily mean you can buy better care . Prices are the same as agreed between the supplier and the insurer. “This is why you will see vastly different prices for the same procedure, even in the same city,” says Elizabeth Mitchell , president and CEO of Network for Regional Healthcare Improvement, a non-profit organization. “One hospital may charge $ 5,000 for a service, while another may charge $ 1,200 for the exact same service with no significant difference in quality.” Shop search has been suggested as a solution, but as we will see, this does not always work.
In other words, many healthcare players have realized that they can charge big bucks just because they can. Of course, this is not the only reason why costs are rising: there are also boring reasons, for example, that medical technology has become more expensive as it has improved over time. Medical care in, say, 1950 was much cheaper than it is today, but no one in their right mind would travel back in time for medical help. Other reasons include an aging population (older people use more health services) and economic prosperity (the richer we are, the more we are willing to spend to prolong our lives), according to David Newman , executive director of the Health Cost Institute . …
Insurance doesn’t do much anymore
Decades ago, Newman says, insurance covered most of a person’s health costs when they had high costs. But today, insurance plans often pass a large portion of the cost of your health care to you. The general term for this is cost sharing , and in addition to copays, it includes co-insurance (you pay a percentage of your treatment) and deductible (a hefty amount you have to pay out of pocket before full coverage begins).
The idea is that you will become a smarter consumer when you bear the most of the costs. You will avoid unnecessary grooming and opt for cheaper options if possible. What started out as a minor hindrance to making sure you really need help, such as a $ 10 copay for an office visit, has become a huge responsibility for anyone unlucky enough to get sick.
According to the Kaiser Family Foundation, franchises get huge , even with “good” insurance, and overall cash costs rise as well. (However, this does not mean that you should cancel your insurance. If you do, you will pay more in tax penalty and miss out on the free , non -deductible discount .)
There is no easy way out of this mess, Newman says: We are paying for skyrocketing health care costs in one way or another. Lower contributory plans have higher premiums, and even if your employer pays the bill, they don’t spend that money on your paycheck.
There are many more pitfalls in the cost structure of health insurance. We’ve discussed some of the things to avoid , such as high or non-existent out-of-network service limits. Another example is a reference price , at which the insurer sets a limit on how much they will pay for a service. Great for them, it sucks to be you. “This is the most unfair shift I’ve seen,” says Mitchell. They ask you to be an informed consumer when you may not have the ability or information to make cost-effective care choices.
We can’t find a way out of this mess
Here’s the worst thing I’ve learned while researching this post: Hospitals and insurance companies may refuse to tell you their prices, citing confidential negotiations. This means you can call the hospital and hear that you are not allowed to tell you how much your upcoming surgery will cost. “It’s not universal, but not uncommon,” says Mitchell.
If you’re lucky, you may have ways to find out the cost. Many insurance companies provide cost estimates somewhere on their website, Mitchell said. Some states have databases of claims of all payers that track how much people actually pay for health care. Finally, there are databases that you can use to estimate costs. You may even be able to find cost information at your nearest hospital. If not, at least you can look at the national and state averages. Guroo , Clear Health Costs, and the Blue Book of Health are good places to start.
But even if you know how much something is worth, there is not always much you can do about it. Pricing depends a lot on where you are : A $ 21,976 operation in Tucson, Arizona costs $ 57,504 in Sacramento, California. In some cases, the difference between two neighboring cities can be worth the trip.
On top of that, “a lot of things can’t be bought in stores,” Newman says, based on a report from his Healthcare Cost Institute, which found that only 43% of healthcare dollars (for people with private insurance) is spent on treatments you could. would theoretically shop for. This number gets smaller when you think of people who are too sick to spend energy shopping, or people who live in places where everything costs about the same.
Problems with health care spending may sound like bad news, but there are a few highlights. First, it is at least possible for everyone to get insurance now: in 2015, only 9.2 percent of Americans are uninsured. Even if you have to pay a lot out of pocket, you will still benefit from the negotiated rates. Mitchell says that while it’s always wise to try to negotiate a discount yourself, you can rarely get a deal done as well as a major insurer.
Likewise, you should still try to shop for skin care products, even if you don’t manage to save a lot of money that way. Do your best and consider setting up an HSA to supplement your franchise budget. But if you still face high costs, don’t be discouraged. This is not you, this is the system.