July 19, 2016 How-To

Saving for Your Health Care Future

We save money for cars, homes, and our kids’ education. We even save up for family vacations, home repairs, and holiday shopping. In today’s world, we have accepted the fact that these big-ticket items require some thought, some pre-planning, and some budgeting. One thing we are not accustomed to is budgeting and saving for health care, mainly because we’ve never had to.

Until recently, the majority of Americans paid their monthly insurance premium and the occasional modest copay. We didn’t worry about the actual cost of a doctor’s visit because the insurance company usually covered it. Unfortunately, the days of a $10, $25, or even $50 copay are quickly becoming a thing of the past. Here’s why.

Over the past two years, health care costs have increased by about 7 percent, while the rate of inflation has held steady at about 1 percent. In other words, health care costs (prescription drugs, hospital stays, and high-tech imaging) are far outpacing any other segment of the American economy, including wages. To combat these trends – and keep insurance premiums affordable – more and more employers are opting for high deductible health plans.

According to the Commonwealth Fund, 34 percent of people who receive health insurance through their employer have a high deductible of $1,000 or more. What this means is these folks pay $1,000 out of pocket (not including their premium) before their health insurance kicks in. Once the deductible is met, the health insurer picks up the tab or a percentage of it.

One of the most important features of a high deductible plan is a health funding account. These accounts, which come in several different formats, are oftentimes deducted from your paycheck tax-free and can be used to pay for most medical expenses. This means that if you take an expensive drug or know you need a knee replacement, you can plan ahead.

Speaking of planning ahead, you wouldn’t purchase a house or car without shopping around, would you? Now that you’re footing more of your medical bills, it makes sense to comparison shop. After all, the average cost of a total knee replacement in the U.S. runs about $50,000, and some commonly used prescription drugs, including the wildly popular Humira, cost about $45,000 a year. That’s the same price as a BMW!

The good news is that – if you have health insurance – you won’t ever pay the actual cost of a knee replacement or a one-year supply of Humira. The Affordable Care Act set an out-of-pocket maximum of $6,850 for individuals and $13,700 for families. I understand that’s a lot of money for any family to afford. That’s why it’s critically important for folks to start planning ahead.

16-1591 Business Review Blog Post - Saving for Your Health Care Future2

Unfortunately, shopping for cars is a lot easier than shopping for health care services. Just think of all the websites that cater to cost-conscious consumers. From Autotrader to Travelocity, it’s not difficult to find a good deal on a vehicle or vacation. Try doing the same for an X-ray.

As more and more consumers opt for high deductible health plans, it is imperative that our industry evolve and provide them with the information they need to manage their health care households. A number of health insurers – including CDPHP® – are diligently working to find solutions, but we need to work harder and faster.

In the coming weeks, you will likely see headlines suggesting that insurance premiums are rising again. It’s important for consumers to understand that insurance premiums are a reflection of growing health care costs. Nothing more. While we work to find solutions to lower drug costs and make hospital stays more affordable, it’s important for consumers to get into the driver’s seat and take control of their health care households.

John D. Bennett, MD, FACC, FACP
About the Author

John D. Bennett, MD, FACC, FACP, is president and CEO of Capital District Physicians’ Health Plan, Inc. (CDPHP), an award-winning, physician aligned, not-for-profit health plan based in Albany, NY. Bennett has held the position since 2008 after serving more than 10 years as chair, vice chair, and board member for CDPHP. During his tenure, CDPHP has been ranked among the top-performing health plans in New York and the nation, most recently named #1 in Customer Satisfaction in the 2023 J.D. Power Member Health Plan Study. Under his leadership, CDPHP has also become known as a model employer regionally and nationally and was recently named among the top five Best Companies to Work for in New York by the Society for Human Resource Management, as well as Forbes Best-in-State Employers 2022. Prior to joining CDPHP, Bennett served as founding member and CEO of Prime Care Physicians, PLLC. During his tenure, he co-led a team of 25 cardiologists and helped grow the practice to a 100-physician multi-specialty group. Bennett is board certified by the National Board of Medical Examiners and the American Board of Internal Medicine, with subspecialties in internal medicine and cardiology. He earned his medical degree at SUNY-Downstate Medical Center, Brooklyn, and a Bachelor of Science degree at Rensselaer Polytechnic Institute. Bennett completed an internship and residency in internal medicine and a fellowship in cardiovascular disease at Albany Medical Center. He is a Fellow of the American College of Cardiology and the American College of Physicians. Bennett is currently board chair for the Center for Economic Growth and the Capital Region Chamber, and vice chair for the Palace Theatre. Bennett also serves on the boards of the New York eHealth Collaborative (NYeC), the Alliance of Community Health Plans (ACHP), America’s Health Insurance Plans (AHIP), Rensselaer Polytechnic Institute, and Russell Sage Colleges. Bennett is a member of the New York Public Health and Health Planning Council where he helps shape decisions related to New York State's public health and health care delivery system. Well-known locally and nationally for advancing health care innovation, Bennett was recently named to Crain’s New York Business 2021 Notable in Health Care, as well as the Albany Business Review’s Power 50 list.

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