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September 30, 2005
Hospital Bills a Rip-off?
Finding out how much a hospital charges before you are actually billed can be very difficult. If pressed, most of them will finally come up with a number that has very little basis in reality. The reason is their official price will be four to five times (that's 400 to 500 percent) what they actually charge a PPO patient for the same service. Since 90% of the customers of the non-indigent patients of the hospital will be covered by a PPO, this over-charging only applies to those who don’t have health insurance.
The Lawsuits are coming…
Richard Scruggs, the attorney who made much of his fortune taking on asbestos manufacturers and the tobacco industry, has filed suit against several hundred not-for-profit hospitals in over 20 states. I certainly believe that the U.S. is way to lawsuit-happy, but it will be interesting to see how the hospitals explain a pricing system in which only a very small minority actually pays their stated price. Hopefully the result will be a real pricing system in which patients have the opportunity to shop and compare rates before choosing their hospital.
Posted by Wiley Long at 01:21 PM | Comments (1)
September 28, 2005
Health Insurance Budget Planner especially useful to Health Savings Account owners
Humana has released a new tool that can help you figure out a health insurance budget which can be extremely useful to Health Savings Account (HSA) owners. Accessible by anyone at www.familyhealthbudget.com, the Family Health Budget Planner guides consumers on just how much is spent on annual health related products, services, and activities.
The Planner takes you through the process step-by-step, asking for information such as current insurance information, how many times the family goes to the doctor, how often prescription medicines are purchased and how often the family visits the dentist, eye doctor or other specialists. It also takes into account costs like vitamins, supplements, health club memberships and weight loss programs.
The Planner then takes all your information and calculates how much you should set aside for the entire year, thereby enabling you to better plan for annual expenses. When I added in dental visits, eye visits, and nutritional supplements, it was shocking how quickly it all added up. Fortunately, I get to pay for all those expenses with tax-free money, since they are all qualified to be used in conjunction with my Health Savings Account.
Posted by Wiley Long at 07:36 AM | Comments (0)
September 25, 2005
The power of price competition created by Health Savings Accounts
To understand the impact competition and consumerism (created by health savings accounts) will have on the healthcare market, all you have to do is look at the cost of elective medical procedures.
A great example is laser surgery to correct near-sightedness. In the last 10 years, the cost of this operation has gone down by 50%. In contrast, average medical expenses have increased by over 50% in the past decade. The driving force that can explain this difference is that consumers generally pay for their own laser surgery. They shop around, compare prices, see which doctor has the best reputation, and then make a purchasing decision.
When a third party pays for the procedure, none of this usually happens. The consumer has no motivation to compare prices, and thus the providers have no motivation to offer competitive prices. Often, the providers don't even make their prices known - as is the case with most hospitals.
It will be interesting to see how long it takes for the adoption of Health Savings Accounts to have a serious impact on the price of healthcare.
Posted by Wiley Long at 08:22 AM | Comments (0)
September 23, 2005
Health Savings Accounts in the New England Journal of Medicine
The latest issue of the New England Journal of Medicine has a brief article about Health Savings Accounts (HSAs). Many physicians are very unhappy with the current state of the healthcare system. They often spend an unordinate amount of time and money complying with insurance company rules, they tend to lose money on Medicare patients, and often have very little time available to spend with patients if they want to keep their HMO contract.
Health Savings Accounts do have the potential to change much of that. They also have the potential to cut the obscene profits of some drub companies in the healthcare sector. The drug companies may feel the pinch as HSA owners choose less expensive generic brands over equivalent high-priced patented brands. (Though the coverage of prescriptions by the new Medicare act will likely buffer any impact that HSAs have on pharmaceutical profits - at least for a while). Physicians may find themselves having to post their office visit charges and be more proactive in their marketing if they don't want to lose business to their competitors. It will be interesting to see how it all plays out.
Posted by Wiley Long at 02:11 PM | Comments (2)
September 21, 2005
Health Insurance changing with Health Savings Accounts
Insurance is designed to pay for unexpected expenses that you could not afford to cover. A couple examples:
People buy car insurance to pay if their car gets wrecked or stolen. Car insurance does not cover oil changes or new tires.
People buy home-owners insurance to cover them in case there house burns down, or if they incur some other large unexpected expense related to their home. Home owners insurance does not pay to have the house repainted, or to pay for broken light bulbs.
Traditionally, health insurance was the same thing - insurance to pay for large unexpected expenses. However, during wage freezes in World War II, companies were not allowed to raise pay to attract better workers. They were allowed to offer un-taxed benefits, such as health insurance.
Thus health insurance through a company received a much bigger tax advantage than insurance purchased on one's own, and company-sponsored health insurance became the norm. Since buying anything with pre-tax dollars makes it a much better deal, health insurance plans also became benefit-rich. People came to expect coverage that left them just a few dollars out-of-pocket for doctor visits or prescription drugs.
A lack of consumerism in the healthcare marketplace has since allowed costs to skyrocket out of site. Adoption of Health Savings Accounts may soon change all of that. Hundreds of thousands of people spending their own (tax-free) money on doctor visits and prescription drugs will provide some strong market forces. Those who can offer the best health results for the least amount of money, win. As it should be.
Posted by Wiley Long at 07:42 AM | Comments (0)
September 19, 2005
Health Savings Accounts cause lower health insurance inflation
Health insurance premiums increased by less than 10% for the first time in 5 years. This is according to the Annual Employer Health Benefits Survey from the Kaiser Family Foundation and the Health Research and Educational Trust, which polled nearly 3,000 firms with three or more workers. Could Health Savings Accounts (HSAs) be the reason?
Even though a 9.2% rate of growth is still three times the rate of inflation, it might be big news that the rate of growth is dropping. Some HSA proponents are even claiming that the rapid adoption of HSA plans may have something to do with the change.
HSA plans have high deductibles, and don't cover charges like routine doctor visits or prescription drugs until the deductible is met. Thus the premiums are much lower. Averaging those lower premiums in with all the standard plans out there, and it likely did make a difference. I have no idea how much.
Posted by Wiley Long at 09:15 PM | Comments (0)
September 15, 2005
Health Savings Accounts Promote Consumerism
The purpose of healthcare is to make sick people better, and to reduce the incidence of disease - to make people healthier. Those who do the best job at this should be rewarded the most. This is where Health Savings Accounts (HSAs) come in.
The only real judge of who is doing the best job at this task should be the consumers. By voting with their dollars, consumers reward the producers - whether it be for autos, computers, or french fries - that provide the best value. In a competitive marketplace, consumers will patronize those businesses that serve them well, and avoid those that don't.
Consumerism has been sadly lacking in the healthcare arena for many years, and it shows. One example is prescription drugs. Pharmaceutical companies control medicine more than ever, yet few people pay for their own drugs. Instead, drugs are mostly paid for by insurance companies or the government. The result is a flood of high-priced drugs on the market, many with no proven benefit over lower priced, older generic drugs.
As consumers begin to assert their power through their own decision making, driven by the adoption of Health Savins Accounts by thousands of families across the country, the system will slowly begin to change. Those companies that offer the best value will be those that will be rewarded.
Posted by Wiley Long at 10:52 AM | Comments (0)
September 12, 2005
Using your Health Savings Account to pay for Maternity bills
On individual health insurance policies, maternity coverage can be quite expensive, and is often not worth the cost. One option those expecting to get pregnant should consider is a Health Savings Account (HSA). Purchasing a qualified high-deductible health plan and setting up an HSA could allow 100% of those maternity expenses to be tax deductible.
Let's say a family experiences $6,000 in expenses to have a baby. This might include doctor visits, ultrasounds, doctor prescribed prenatal vitamins, and delivery. If the family has a qualifying plan, they can deposit $5,200 in their HSA, which can then be used to cover those expenses. The remaining $800 in expenses can be recovered from the following year's HSA deposit.
This cuts costs dramatically. It also allows for coverage that might not be paid for by a traditional maternity rider, such as for a mid-wife, or alternative health treatments.
Posted by Wiley Long at 03:19 PM | Comments (0)
September 10, 2005
32% of Employers offer Health Savings Accounts
A nationwide poll conducted by Mellon Financial Corporation indicates that 32% of employers will offer Health Savings Accounts (HSAs) in 2006. Of those, 2/3 will also help the employee fund the account.
Once an employee has an HSA account, it is always there's. They can take it with them if they leave the job, and continue to fund it as long as they have a qualified health insurance plan, even if this is with a new employer or through a private plan.
There are now nearly 500,000 HSAs opened across the country. Some experts predict several billion dollars will be in these accounts in just a few years. This frightens fans of big-government solutions such as socialized medicine. As millions of Americans begin to accumulate money in these accounts, it may become politically impossible for President Hillary Clinton (or whoever) to take them away.
Posted by Wiley Long at 12:16 PM | Comments (0)
September 07, 2005
Lower prescription costs for Health Savings Account Owners
People who spend their own money compare prices, and shop for the best value. As businesses compete, this leads to lower prices for all consumers.
That is one of the main ideas behind Health Savings Accounts (HSAs), and we're already seeing examples of companies that are recognizing this opportunity.
One company is the Save Now Discount Pharmacy, at www.savenowdrugs.com.
From their recent media release:
“August 29, 2005 -- At Save Now Discount Pharmacy, the cost of a generic prescription is usually less than the same generic prescription in Canada and a ninety-day supply is often less than an insurance co-pay. For seniors the every day price on many branded drugs is less expensive than a purchase with the Medicare Discount Card….”
Save Now is the first pharmacy in the state of Washington to adopt a ‘no insurance’ business model. By eliminating the cost of dealing with insurance companies, the price of prescriptions to customers is greatly reduced.
They are only licensed in 13 states currently, but plan to be national soon. If you're paying for your prescriptions with tax-deductible HSA dollars, you might want to check them out.
Posted by Wiley Long at 09:37 PM | Comments (0)
September 05, 2005
Lower Rate Increases with Health Savings Accounts (II)
Another study has been released showing Health Savings Account (HSA) plans to have much lower rate increases than traditional health insurance plans.
The latest study, released by United Benefit Advisors (UBA)(http://benefits.com), one of the nation's largest employee benefits advisory organizations, surveyed more than 12,000 employer-sponsored health plans. The survey found that average premiums increased 9.6% for all plans, but only 3.4% for Consumer Driven Plans.
The fact that consumer-driven plans, such as HSAs, rose in price at a rate only 1/3 of traditional plans, confirms what proponents of HSAs have been saying all along. When the consumer is in charge of his healthcare decisions, he’ll make smarter choices on how he spends his money.
So in addition to lower initial premiums, and tax deductions, it appears that HSAs offer consumers lower ongoing health costs by having dramatically lower rate increases.
Find more Health Savings Account inforamation at HSA for America
Posted by Wiley Long at 02:39 PM | Comments (0)
September 01, 2005
CA Insurance Commissioner's Flawed Criticisms of Health Savings Accounts
CA Insurance Commissioner John Garamendi's report criticizing Health Savings Accounts (HSAs) has a lot of his opinions, but many are not backed by solid research.
For instance, he says "Financial disincentives are likely to cause many to forgo necessary treatment at early stages." However, McKinsey & Co., a management consulting firm, found that patients enrolled in consumer-directed plans are more likely to pay attention to prevention and wellness, and were 30% more likely to get an annual physical.
The complete McKinsey report can be seen at www.mckinsey.com/clientservice/payorprovider/Health_Plan_Report.pdf. HSA consumers know that if they catch a problem early, they'll save money in the long run.
Garamendi's report also makes the mistake of thinking that HSAs are making health insurance less affordable to the uninsured. In fact, the opposite is what is happening. Fully 37% of those purchasing HSAs are people who previously had no health insurance. About two-thirds of our customers at HSA for America are paying less than $100 per month for their HSA plans. Most are choosing plans that cover 100% of hospitalization, doctors' visits, lab tests, emergency room visits, and prescription drugs after the deductible is met.
Fans of one-payer socialized medicine plans are against HSAs mostly because they realize that once millions of Americans have these plans, it will be politically impossible to force them to change to a government plan.
Find more Health Savings Account inforamation at HSA for America
Posted by Wiley Long at 12:21 PM | Comments (0)