Why is My Company’s Health Insurance Going Up and What Can I Do?
The average cost for an American family’s health insurance in 2017 was $18,674. However, most companies pay about 70% of the total cost of health insurance for their employees. If your company pays for your health insurance, you may be in the dark about how much it really costs and how quickly that price has been going up for all Americans over the past couple of decades.
Why Health Insurance Costs Are Increasing 11.8% Each Year
Since 1999 the cost of health insurance has gone up 11.8% every year, according to Kaiser Family Foundation, which is a non-profit organization that has been tracking health insurance costs nationwide. There is no other product or service in America that has gone up so quickly in price. To give you some perspective on this, the average salary of Americans has gone up 0.03% every year since 1999.
Explaining why health insurance prices are increasing so quickly is very complicated, so we’ll simplify it into four main areas:
- Can You Tell Me How Much This Will Cost? Most people don’t know how much medical care is going to cost. It’s hard for most of us to find reasonable prices for our medical care when we don’t get a bill until three months later.
- Is This a Necessary Medical Test or Treatment? It’s estimated that about one-third of our healthcare budgets are for unnecessary tests, treatments, and surgeries. An unnecessary test could be as simple as your doctor ordering an in-depth analysis of your blood when you came for a routine check-up and feel perfectly healthy. Or it could be as serious as having surgery to get a stent put in your heart even though you have never had a heart attack. About half of all cardiac stents put in stable patients are considered unnecessary.
- Inefficient Business Practices. Medical billing is behind sophisticated systems we are used to in other industries like with our banks and credit card companies. That is how 30-40% of our medical bills have errors. On top of that, insurance companies also often have outdated systems for processing these medical bills. As a consumer you are going to deal with common mistakes from both sides.
- Unethical Business Practices. Unfortunately fraud and misleading information happens in our healthcare system. Fraud is when a healthcare service intentionally breaks the law or a contract in order to make more money. An example of fraud is when a health insurance company charges hidden fees to companies for using their services and takes more of the company’s money without the company realizing it. On the other hand, misleading information may not be illegal, and yet it’s used to sell a service that isn’t valuable. An example of misleading information is when a company buys prescription benefits for their employees and is promised a 50% discount on all of their prescriptions. The company is not told that they won’t save money, because the markup on prescriptions is so high.
I Can’t Afford My Company’s Health Insurance. What Can I Do?
As an employee, you actually have quite a bit of power to help bring down the cost of your job’s health insurance. You can start to cut costs by mastering just one of the options we list below. The more people that are on board at your company to stop bad practices in healthcare, the better chances you have of creating an affordable health plan at work.
- Ask Five Questions: At your next doctor’s visit, before you go through with having tests done or moving forward with your doctor’s recommendation, ask these five questions. They were developed by Choosing Wisely, which is a program in California that has worked at stopping unnecessary medical services. The program educates both patients and doctors to second guess common medical choices. It has found five questions empower patients to decide what medical services they need for their health.
- Do I really need this test or procedure?
- What are the risks or side effects?
- Are there simpler, safer options?
- What happens if I don’t do anything?
- How much does it cost, and will my insurance pay for it?
- Learn To Read Your Medical Bills: Medical bills have really been designed for health insurance companies to read – not you. However, it’s a worthwhile time investment to figure them out. You can follow the steps we outline to learn how to read a medical bill. Once you know how to read one, you know how to read them all. If you find yourself becoming confused about charges on a medical bill, that’s a red flag for a possible error that can be fixed and save you money.
- Talk to Your Health Benefits Manager: The person in charge of your company health insurance plan is different at each company. It’s usually a combination of a couple of people, such as your Human Resources Manager and your Chief Financial Officer. Speak up to voice your concerns about the rising costs and let them know you want to help change the status quo. There is a non-profit network of experts who have found successful ways to cut 20-40% of healthcare costs for companies called Health Rosetta. If your company isn’t sure how they can make changes to your health plan, this is a good place to start. Health Rosetta provides free education for them to learn.