We make educated decisions on the products and services we purchase every day by using the information provided to us on cost and value. Yet, most people go blindly through the healthcare system with little to no knowledge of what it actually costs.
Consumers and providers have been shielded by the real cost of healthcare for far too long. In the past, most healthcare insurance policies covered the majority of the costs, leaving the patient to pay the remaining small portion. As a result, this lulled patients into a false sense of security. Now, patients are thrust into reality due to an illness, injury, need for high-cost medication or simply because of the extremely high deductibles on most insurance plans today. Once the medical bills start coming in, we realize how expensive healthcare is and how unprepared we might be for a medical crisis.
Understanding the basics of how healthcare insurance policies work is something that most of patients don't worry about until they become sick. Using this information patients and providers can make informed decisions on healthcare treatments.
Let’s start with the healthcare insurance policy. Nearly 66% of people get their health insurance through their employer. In this scenario, the employer pays an average of 83% of the cost of the plan, leaving the employee to pay the remaining 17 percent. With the rising cost of healthcare, many employers are flipping this ratio and requiring the employee to pay higher rates. This means that more and more money is going to come out of their paycheck for health insurance.
For the growing number of people who do not receive healthcare insurance through their employer, private healthcare policies can be costly. In fact, many people are paying rates that compare to a home mortgage for an individual plan. The Affordable Care Act (ACA), which was signed into law in 2010 was meant to help make healthcare insurance more affordable for the average consumer through a mixture of incentives. Today, the ACA is in a state of constant change and its future is unclear.
In an attempt to keep costs down, insurance companies have raised the deductibles and out-of-pocket costs that people have to meet before their insurance policy pays on a claim. This means that the cost of care is left to the employee until they reach their annual deductible and out-of-pocket costs. If healthy, the deductible may never be reached, which means the full price of your healthcare costs will be paid. This is why many employers offer medical saving accounts (MSA) or health saving accounts (HSAs) so that employees can put money into the account to pay for the out-of-pocket costs they are responsible for before they meet their deductible.
Other tactics employers are using is purchasing high-deductible health plans. Premiums are lower than a traditional plan, but the deductible the policyholder has to meet is high. High-deductible plans can be as high as $10,000-$20,0000 before the program pays out the first dollar of coverage.
Even after the deductible is met, there may still be a percentage to pay based on the specific policy before the insurance company starts to pay on the claim. The key to the success of these plans is being prepared and setting aside money in an account that patients can tap into if there is a medical emergency.
With the rising costs of healthcare, employers are shifting more of the cost to the employee by raising patient premiums, deductibles and out-of-pocket costs. As a result, there is a call for transparency around healthcare costs so the patient and the provider understand the value and quality of the services they’re receiving/providing and can make educated decisions on care.
Importance of Having Information
When providers and patients understand the cost of healthcare services, they can make more informed decisions. The provider may opt for another type of treatment that is less expensive while still meeting the needs of the patient. Taking the same line of reasoning, when a patient knows the costs of services, they are able to ask their doctor questions, such as: "Do I really need this test? If I don’t have the test, what will it mean?" "If I do have the test, will it change the outcome?" The answers to these questions can greatly influence decisions.
This short educational video form Robert Wood Johnson Foundation explores the importance of transparency in healthcare and the need for data so patients and providers can make informed decisions.
How Patients Can Prepare and Educate Themselves on Healthcare Costs
Here's information to share with patients on how to prepare themselves and communicate with their providers on the cost of their care:
Know Your Insurance Policy: Many people don't take the time to read their member handbook, but that is a big mistake. The member handbook provides essential information about your plan that allows you to be informed about the benefits and limits of the policy.
Talk to HR: If you have any questions about your policy, don’t hesitate to talk to your human resources department. Many times they can help you understand the details of your policy and let you know what your out-of-pocket cost will be. Ask if they have a medical savings account so you can have money set aside that will help you pay your out-of-pocket costs. This is especially important if you or a member of your family has a chronic medical condition. Your HR team can help you estimate what your contribution should be, as well as provide you with the rules for any unused funds in your account at the end of the year.
Ask Questions: What is the cost of the service/procedure/medication? To find this answer, start with your insurance company. Today, most insurance companies have provider networks and set prices with the organization who will provide services. Providers who join the network agree to the price structure established by the insurance company. Once you find out the cost of the procedure, you can ask what your share of the cost will be based on the policy you have.
Talk to Your Doctor: Talk to your doctor about what you find out. Sharing the cost of care with your doctor will help them weigh the value of the test against the price. If the benefit does not outweigh the cost or you cannot afford the service, your doctor can look at other options with you.
Be Open With Your Doctor: Sharing your goals with your doctor is essential. When you have a serious medical condition or need a procedure to address a problem, be sure to ask your doctor how the procedure will impact your quality of life. Will it make you more functional? Are there other things you can do to address your problem?
If you are not committed or ready to make a commitment to change your behavior or do what needs to be done to have a successful outcome, having a procedure or taking a high-cost medication might not be right for you. Having this discussion with your doctor is important so they know what your goals are and can design your care plan to meet them. If you do decide on a high-cost procedure or medication, find out what your share of the cost will be. Can you afford it? If not, what arrangements can be made to help you pay your portion?
Many times there are ways to offset costs or allow you to pay off a bill in payments that meet your budget. Your provider may have a case manager or patient advocate who can help you find resources. There is a lot of help out there, but it takes research to find it.
Shared Decision Making
All of these points are part of a growing trend called shared decision making. Shared decision making is when the patient and provider sit down and talk about the condition and treatment options. They research the situation together and discuss the findings. This allows patients and their providers to make an informed decision that will be right, both medically and financially.
Download this Patient Collections Bootcamp to learn more strategies about effectively preparing for and collecting patient financial responsibility.
Here are some additional articles that can help patients ant providers on their journey together.
- Health Insurance Premiums and increases: http://www.ncsl.org/research/health/health-insurance-premiums.aspx
- Promoting Informed Decision Making in a Primary Care Practice: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3213756
- Helping Patients Make Better Treatment Choices with Decisions Aids: https://www.commonwealthfund.org/publications/newsletter/helping-patients-make-better-treatment-choices-decision-aids