This New York Times article got me pretty frustrated once again with the state of our medical system.
In the article, a cash paying customer got charged $199 for a coronavirus test whereas the person with insurance got charged $6,408. This proves that insurance carriers are not really negotiating in the best interest of their customers.
You see, if they were to negotiate lower pricing, that means they could charge less for premiums which would be great for customers. Except that means they are driving their own revenue and profits lower. No corporation would ever do that unless competition forced them to do that. But there is no competition in the health insurance industry because your plans are chosen by your employer, not you. On top of that, once you have a plan and need to see a doctor, it is nearly impossible to shop the costs of different providers and procedures.
And that's why we are where we are today, crazy increases in procedure costs and insurance premiums because those calling the shots and setting the prices have zero incentive for lower prices. But all is not lost. There are steps you can take now as well as things we can do as a society in the long term to improve this frustrating reality.
Here are some steps you can take to lower your medical costs in today's system:
- It starts with doing as much research as possible before the procedure. Ask your doctor's billing department what items they will bill and what their pricing is with your insurance. Ask if any of the items are optional. In the article, the testing laboratory tagged on a bunch of other blood tests that the patient didn't ask for. People need to become more astute at knowing what they're being charged for just like they do with any other purchase.
- Choose your employer's high deductible health plan with a Health Savings Account. There are several benefits to this. First, it is often the lowest cost plan your employer offers. Second, your employer usually gives you seed money in an HSA that is yours to keep and that you can add to. Third, you can use this HSA money for medical costs so it turns you into a cash paying customer.
- As a cash paying customer, you now have some negotiating power which is key. So shop around with different doctors and providers. If they are all in your insurance network, they will all likely have the same insurance pricing. But they likely all won't have the same cash-paying-customer pricing. You may want to still use insurance so that way the procedure gets counted towards your deductible. But at least you can decide that instead of being forced into that decision.
- Avoid the ER and ambulances at all possible. Of course there are situations where you can't do this, but there are certainly many times where this can be avoided but most people still go. Not only is it crazy expensive but often times the doctors and surgeons at those facilities are not as skilled as true specialists. So for better care at a lower cost, try to go to a doctor's office during normal business hours or use urgent care or telemedicine after hours, not the ER. And if you can't drive, get a ride there from a family member or friend, not an ambulance.
- Use the Ladder of Pain Care to work through any pain issues. The lower rungs of the ladder are often the least costly and least invasive. And if you have an HSA, you have a source of cash to pay for multiple procedures to a physical therapist, chiropractor, acupuncturist, or stem cell therapist that may not be covered by your insurance. And don't just see a surgeon because all they will recommend is surgery.
- If you are older and have access to different medical plans (like Medicare and an employer plan), be sure to shop pricing under both as well as the cash paying option. It's crazy how some plans have better pricing for some things but not others.
- Look to invest your HSA in stocks and other approved methods. This will help ensure your health savings keep up with inflation. One tip is to invest the money in healthcare, pharmaceutical, and biotech companies. Usually their performance tracks the increase in medical costs pretty well. Look at a low cost ETF like VHT which is Vanguard's ETF that covers all U.S. companies in the healthcare sector.
- Review your insurance statement and question the billing. We all need to take a more proactive role in managing healthcare costs even if insurance is paying the bill. After all, what you don't pay for but your insurance does turns into higher premiums for everyone. The insurance company wasn't there with you during the procedure, and sometimes doctors make mistakes in billing or charge for extra stuff because they know insurance will just pay the bill. You're the only one that can check to make sure everything was billed accurately. And it may end up saving you money. In the NY Times article above, the person who got charged the $6408 obviously went to the public media with that info and insurance ended up not charging her anything in the end. So it pays to be observant and diligent.
And here are some ideas for us as a society to consider to fundamentally change the system for the better:
- Insurance carriers should not be for-profit corporations. They should all be mutual companies owned by the customers. That way their interests are totally aligned with their customers'. And any profit/savings generated ends up back in their customer's pocket, not investor's.
- Employers should not be the ones to provide health insurance. Instead everyone should be able to buy their own plan through their state's exchange and employers can instead just provide tax free insurance subsidies. This would create much needed competition for healthcare coverage and give people more options for plans that they can keep whether they have a job or not.
- Pricing medical care should be transparent and upfront. It should be like buying anything else online. You get to search who provides the care you need, what they charge, and what their profile and reviews are before making your decision. There should be no surprises to the customer on the bill.
- We should have more education on the costs of visiting an ER and why to avoid one. There should be less costly options for seeing or talking to a specialist. I am very hopeful that the strides we've made in telemedicine from COVID-19 will continue and hopefully become this solution.
- We should explore some form of expanded national healthcare using government doctors and facilities similar to the VA. I'm not staying this would become the only option and it shouldn't be massively subsidized but this would set the bar for affordable care for the private marketplace to meet or beat.
- We should look at nationally covering certain parts of healthcare. It doesn't have to be all or nothing with universal healthcare or Medicare for All. Maybe we start with covering all preventative care. Then expand to infectious disease. Then maybe accidents of any kind (work or personal) similar to the New Zealand model. Maybe then all that is needed is for insurance to cover chronic or developing health issues that are not caused by accidents or infectious disease. This would dramatically reduce insurance premiums.
- We should have plans that cover different levels of care. Maybe there is a generics only plan where only generic prescriptions are covered and you have to pay cash for the advanced medicines. No doubt this would save a ton of money and some people might be okay with this. Same thing for surgery. Maybe some people would be okay not needing surgery covered or at least committing to exploring all other alternatives first.
- There should be critical illness coverage that expands to multiple years. Imagine being covered for cancer or back pain or some other major issue over multiple years. Instead of insurance providing coverage one year at a time, this would cover you for the entire duration of the issue. Maybe then this would be all the coverage you need because you can cover routine minor stuff with your HSA or cash.
- There should be a buying club like Costco for medical costs. This is what insurance sort of is. Most times, insurance has negotiated the lowest price with your provider and you are better off being under an insurance plan to have access to that pricing. Imagine if you could have access to that pricing without needing insurance. You just join the United Healthcare Club, Aetna Club, or Cigna or Humana Club.
Hopefully this helps give you some ideas you can do now and some things to think about and act on for the future to improve the healthcare costs in this country. One thing is certain, we should not sit back and do nothing. It's costing us all too much.