February 6, 2009

Healthcare 2.0 – Saving Money at What Cost?

Dean Halverson

In a recent article, I discussed the concept of Healthcare 2.0, the new model for healthcare in the U.S. As employers shift costs to us, we as consumers are now fully aware of how healthcare costs impact our household budget and financing. We are not only paying more of our insurance coverage, we are also paying more of our own costs in the process. This is evident in the Midwest, one of the hot spots for High Deductible Health Plans (HDHP’s), characterized by deductibles of $1,500 or more for an individual or $2,500 or more for a family.

Both Leede Research and national organizations have found that this switch in care financing is changing the marketplace itself. Those of us with commercial insurance, whether through an employer or individually, are pulling back in response to the high cost of care and the current economic situation. This is putting significant stress on the healthcare delivery system. What you may not know is that providers make a living on this group—the commercially insured population. Medicare and Medicaid reimbursement is such that providers cover only their variable costs for this type of care. Therefore, reductions in commercially insured business results in significant impacts on provider budgets and bottom lines.

Traditionally, we as consumers have not been very responsible users of healthcare, but providers made money on us. We generally followed our doctors’ instructions without question, and just gave our insurance card to pay for them. But now that we are paying for these services ourselves, we are showing much more responsibility. We are asking questions and eliminating duplications in testing and diagnostics that were common in the past.

Unfortunately, recent evidence shows that we may be going far beyond just cutting the fat. Local and national data indicates that at least half of households have seen some financial impact because of the cost of healthcare. Some households are juggling bills in order to pay for healthcare needs. Others are delaying care and treatment for non-emergency needs, like that annual physical. We may be delaying elective surgery, like a knee repair, until it becomes absolutely necessary. There are even some of us who are extending prescriptions, either by cutting the frequency of taking medications, or cutting pills in half. These behaviors are cause for concern in the industry.

While the immediate financial benefit of these cutbacks may be obvious, the long-term impact may not. Medical professionals now worry that eliminating preventive care could result in more serious conditions with higher costs. This is why many HDHP’s waive the co-pay on preventative care—to create an incentive for consumers to serve as a frontline defense against more significant issues down the road. The key to a healthy future, both financially and physically, is to use our healthcare dollars wisely and make sure that care is both needed and beneficial. Talk to your doctor about the role prevention can have in your future quality of life.

RT @wavedriven as healthcare consumers cut corners, its important to ask, at what cost? wavedriven.com/blog

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