Will 2015 Bring Lower Health Care Costs?

Health care costs may be going down in 2015, but what about your out-of-pocket expenses? Photo: Bradley Gordon

Health care premiums may go down in 2015, but what about your out-of-pocket expenses? Photo: Bradley Gordon

When it comes to health care, the most common question is: Will my costs go up in 2015? The answer is a resounding… absolutely maybe!

There are multiple answers. The cost of health care services will be going up in 2015. That means doctors and hospitals will increase their fees. The same is true for lab work and other diagnostic testing. Even the cost of paramedic care and ambulance services will rise. Medicine is no different than any other business where year-over-year price increases are standard operating procedure.

Since most of us don’t pay cash for medical services, we have little or no connection with the amounts that are billed. That’s because medical care is really a wholesale business where prices are based on volume. Insurance companies negotiate with doctors and hospitals, and health care premiums reflect that.

This brings us to the more important question: out-of-pocket expenses. For our purposes, we’re going to consider out-of-pocket health care costs to be the cost of insurance, co-pays, co-insurance, deductibles, and uncovered charges.

It’s Personal

National averages make for great stories on the nightly news and wonderful talking points for politicians and political hacks from across the spectrum. That’s because statistics can be so readily manipulated to tell different stories.

The macro facts are that, on average, premiums are increasing by the smallest percentage in recent decades. This is because about half of all health care plans are going down in cost.

But even for plans that are reducing prices, that does not always mean a reduction in out-of-pocket health care costs. Ultimately, what matters is our personal economies and household bottom lines.

Whether you’re buying insurance through the federal marketplace, one of the state exchanges, or elsewhere, insurance companies change benefits and premiums annually. But determining whether your out-of-pocket costs will go up or down is more than a matter of looking at your premium cost — it’s knowing how changes to your plan will affect your expenses.

To do that, you will also have to consider how you consume medical services. That’s because some insurers are lowering premiums but increasing deductibles or co-payments. Others are changing the way they pay for emergency room care.

Benefit Changes

The changes affect plans in all price ranges and across the coverage spectrum. For example, in my home state of Pennsylvania, Aetna’s Premier 2000 PD lowered its premium for a 40-year-old individual by a little more than 14%, or $59 per month. Aetna also lowered deductibles from $2,000 to $1,400 for medical and from $500 to $250 for drugs. In fact, six out of 10 coverage categories lowered costs for policyholders.

However, the most potentially costly change came in the form of emergency room treatment, where the plan went from a flat cost to patients of $250 to a $250 co-pay after the deductible. That means a trip to the emergency room can cost a policyholder $1,650 under the new terms, which is the deductible plus the $250 co-pay.

Strategic Thinking

Coverage changes for services like emergency room care appear to reflect the desire of insurers to drive patients to take greater advantage of preventive services, including regular visits to their primary-care physicians.

From the insurance company’s perspective, it’s simple math. Even if they pay doctors $100 per patient visit, it is still far less costly for them to encourage patients to visit their family doctor rather than the emergency room, which is among the least efficient methods of delivering routine health care.

The bottom line for health care consumers when it comes to determining your 2015 health care costs is to look at more than premiums. When considering reimbursement rates, honestly assess how you consume health care and make changes that can lower your costs in the short and long terms and improve your overall health, such as taking advantage of preventive-care programs.

By asking your insurance company to make more frequent, smaller payments for your care, you can reduce costs for yourself and the insurance company and improve your physical well-being in the process.