Knowledge is a critical weapon in the battle against rising health care costs. As more employees become responsible for paying for a greater portion of their health care coverage, the ability to make smart consumer decisions becomes more important than ever.
“The average person with employer-sponsored health care coverage is unaware of the complete cost of health care services,” says Howard Cutler, vice president and executive director, eastern Pennsylvania, HealthAmerica. “There’s a difference between what the patient pays out of pocket and what the doctor receives from the insurance company. Understanding this difference helps employees become more informed consumers.”
Smart Business spoke with Cutler about how to become an informed consumer in the health care market.
How well informed are consumers about the costs of health care services?
Studies show that most people have no idea what a hospital or other provider might actually bill. A Harris poll indicated that 63 percent of respondents did not know the cost of their recent treatment until the bill arrived, and another 10 percent never learned the cost. And most people don’t realize that a trip to the emergency room for nonemergency services costs a lot more than going to an urgent care center or seeing their doctor.
Why should consumers care about costs?
Being unaware of actual health care costs contributes to several problems. People may seek services that they don’t need or seek them in a more costly setting because they think it’s cheaper than it is. With the advent of more coinsurance and deductibles, patients likely will experience sticker shock when they realize the portion they have to pay.
And it’s use of services or overuse or inappropriate use of services that drives up health insurance premiums for everyone. Using auto insurance as an analogy, if were we all reporting our cars stolen, getting points for traffic violations and asking for extensive body work and repairs to our cars, all those claims would make our collective auto insurance premiums rise.
Is it difficult to become a better consumer of health care?
The easiest thing to do is to know your options before you need them. Read the materials from your health plan and see where you can get services. If you know you’ll need a service repeatedly such as blood work or a certain prescription call the health plan and ask where you can get the most affordable cost without compromising quality or safety.
Obviously, we’re not talking about emergencies, but in most cases of chronic disease, mild illness and sprains, your family doctor, pediatrician, or internist should be the first stop for help. Being a good consumer means understanding your benefits, as well as understanding that seeking care in the appropriate setting saves everyone money.
What tools are available to consumers who want to know more?
Many insurers offer Web-based tools that provide prices for specific services that can enhance consumer awareness. Members can look up cost differences between providers, care centers and medications.
In addition, almost every insurer offers a nurse line that’s available 24/7. Members can get help with determining the next steps for symptoms and whether self-care might be appropriate. Or, the nurse might recommend an urgent care center, or a retail clinic in a local drug store, or help the member decide that an emergency room visit is needed. Good, quality care does not have to be the most expensive care.
Are patients better consumers now than when employers paid for all benefits?
Consumers have become better in certain areas, typically with pharmacy programs and some physician office visits. As individuals share in a greater portion of the cost for their pharmacy benefits, they have been more willing to consider using generic drugs. And more patients are realizing the value of a good relationship with a primary care doctor.
In addition, more people are realizing that when they visit the emergency room for routine services, the wait time is long. Emergency room doctors and nurses must focus first on situations where life and limb are in danger. That can mean that a sore throat or sprain is going to have to wait.
How can employers help employees become informed customers?
First, help them recognize that health insurance premium increases are directly due to underlying increases in health care costs and utilization. Explain the factors driving health care costs, which include increased use of services, new and experimental services, and duplication of services. Promote the use of in-network providers, as there is usually a financial incentive to use one.
But most important, don’t forget that the best and cheapest way to treat any illness is to prevent it in the first place. Communicate health and wellness tips, such as exercise, preventive visits and others available on many reputable health education Web sites.
What other information should employers provide?
Tell employees how much you pay for health insurance premiums. Many will be shocked to learn what you pay on their behalf. Communicating this is especially important during times of open enrollment or benefit changes. But it’s never too early to start.
An employer needs to spotlight the per-employee average or highlight the cost of individual and family packages. This compensation doesn’t show up on paychecks, and employees don’t really understand its value.
Howard Cutler is vice president and executive director of HealthAmerica’s eastern region. Reach him at email@example.com.