It's sticker shock time. Employers are getting the final numbers for 2011's health care costs. Things are looking up. PricewaterhouseCooper's June 2010 Report predicts a 9% increase which is less than 2009's 9.5% increase.
Even a small victory is still a victory.
Your choices this fall are going to look a lot like last year. There are changes, but they will be a continuation of trends that we've seen for years. Bottom line, if you spent $14,000 last year on health care for both insurance and out of pocket expenses for your family, in 2011 you should budget $15,260 for the same services.
The primary driver of the cost change is uncertainty. No one really knows what to expect. PWC puts it in a nutshell:
Thanks to the worst recession in a quarter century, employers had less to spend on their workforces. Then came health reform with dozens of small-bore changes about how healthcare is financed, delivered, packaged and regulated. Some changes will drive the trend up, while others will push it down.
The list from PWC's report has 2 sections, one that increases employer costs and one that decreases the employers costs. The reality is that all these market forces will combine to increase your costs in either higher premiums, deductibles, coinsurance, copays and a flirtation with reducing or excluding services not prohibited by PPACA.
The Grandfathered Insurance Plan
When you get your benefits packet this fall, you need to look on the Summary Plan Description and determine if you have a grandfathered plan which means some of the PPACA changes won't be in effect for you. Employers are looking at how to work with the newly passed PPACA and stay within their budget for health care benefits at the same time. One of the ways to do this is to put off anything in PPACA that will increase their costs.
Look out for Waivers on lifting annual and life time limits.
In response to concerns that the restricted annual limit minimums could adversely impact participants in limited benefit and "mini-med" plans, the regulations direct the Secretary of Health and Human Services (HHS) to implement a program under which these requirements may be waived if compliance would result in a significant decrease in access to benefits or a significant increase in premiums. HHS guidance describing the waiver application process is expected in the near future.
What that means is if you have a plan that limits out patient service benefits to $2,000 per year.
That would be:
- A colonoscopy at your doctor's in-office ambulatory surgery center, you've just hit the limit (that would be after all the services are billed and paid for including anesthesia).
- A thallium stress test which can be as much as $4,000. That means you could get stuck for half of that, if your policy limits you to $2,000 for out patient services.
- An MRI can be just as expensive as a stress test, with you picking up whatever exceeds your policy.
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Where Your Health Care Costs Are Going Up
- Uncertainty is going to get the insurance actuaries to predict and project higher medical benefit expenditures which will translate into across the board higher premiums, deductibles, copays and coinsurance.
- Employers are looking to get the employees to reduce utilization by increasing cost sharing where the costs will shift from the employer to the employee. Wellness programs may become a handy way to increase employee costs. Some employers plan to replace flat rate copays with a percentage of the allowed charges known as coinsurance. Look for it costing you an extra $10 per office visit and another $5-$15 for each prescription. Look for a hefty hike for any services outside your network (which includes hospital anesthesiologists and pathologists who NEVER join any network.) Although PPACA prohibits charging higher copays for emergency department visits, out of network means you pay what your insurance doesn't if the hospital doesn't accept assignment - that's called balance billing.
- Look for more of your medications disappearing from your insurer's drug formulary and across the board increases on medication copays or coinsurance. You'll find if the generic doesn't work, the off formulary drug copay or coinsurance is up by $10-$15. A good trend is that more companies are waiving or discounting copays for using the company's mail order pharmacy for chronic condition medications like diabetes or blood pressure meds.
- COBRA costs are up for those who can afford COBRA since the subsidy expired. This means more people will be uninsured before the public option becomes active. Uninsured people pay the highest prices in health care because there is no one negotiating a discount for this huge group of people.
- Cost-shifting from Medicare is expected to increase as hospitals see their rates cut for the first time after seven years of increases that nearly matched or exceeded inflation increases. Cost shifting used to be blamed on the uninsured, but Medicare and Medicaid are major culprits of this phenomenon, too. Look for hospitals to find more creative ways to "justifiably" add more services to people with "good" insurance. Medicare patients won't get kicked to the curb prematurely due to Medicare's sanctions for readmissions within 30 days of discharge. The greater number of services billed to private insurance will trigger higher premiums and more copays and coinsurance for you.
- Higher costs for children. Eliminating pre-existing conditions for children is adding an uncertainty factor that his difficult to predict. Plus, young adults stay on their parent's policies until 26. Look for insurers to over estimate the costs of treating kids with pre-existing conditions and young adults who opt to stay on their parent's policies until they are 26.
- Required Electronic Medical Records (by 2013) are partially funded by the stimulus bill. Medicare will levy penalties against those without EHR beginning in 2015. Hospitals will invest billions of dollars into certified electronic health record (EHR) systems. CCHIT Certification costs the software developer $40,000 fees per module and there's no guarantee that CCHIT will be the selected certifying body by HHS. Providers will need to generate more revenue to cover these IT costs. Again, there will be a lot of creative ways to justify your utilizing more medical services to generate this revenue. Look for more tests and services made necessary due to "malpractice" issues to justify the increased utilization.
We're in for a bumpy ride while the "free market" sorts all this uncertainty out. Meanwhile, take care of yourself.