Dealing With the Rising Cost of Healthcare

By Scott Kittrell, CFP®, CDFA®, FPQP®

Senior Financial Advisor, Principal

March 6, 2023

The cost of health care in the U.S. continues to rise with no slowdown in sight. According to the Centers for Medicare &Medicaid Services (CMS), healthcare spending in the U.S. is projected to grow at an average annual rate of 5.4% and reach $6.2 trillion by 2028. Average Americans, regardless of their health, are feeling the impact directly in their wallets.

Often noted as having the highest-quality health care in the world, the U.S health care system does have its own set of challenges. Our health care system is a fee-for-service system structured to reimburse providers for each visit, test and procedure. Critics contend that the fee-for-service system encourages providers to push service volume and emphasize the use of cutting-edge technology, both of which can result in redundant, unnecessary and overly expensive treatment. Large hospital mergers that reduce competition, malpractice litigation and a more recent rise in inflation are all contributing to the rising cost of health care in the U.S.

As our population grows, it is also getting noticeably sicker. Chronic diseases such as diabetes, heart disease and asthma now account for the vast majority of health care costs in the U.S. As insurance companies deal with the increased cost associated with these chronic diseases, insurance premiums are pushing higher.

So what can we, as consumers, do to fight back against the rising cost of health care? Quite a bit, but it requires a proactive effort. Here are a few ideas:

  1. Stay healthy: The first and most important thing you can do to reduce the cost of healthcare is to live a healthy lifestyle. Don’t smoke, make sure to eat a healthy diet with lots of fruits and vegetables, exercise and get plenty of sleep. It’s simple advice but not always easy to follow.
  2. Choose the right health care plan: The best fit depends on the needs of your family. If you have ongoing health needs, a plan with comprehensive coverage (albeit higher premiums) may do more to keep your overall health care expenses in check. In contrast, if you and your family have exceptional health, a lower level of coverage with lower premiums may be the best option.
  3. Know your health care plan: Educate yourself on your health care insurance. Know what is covered, as well as whether your providers are in network or out of network and get familiar with any enhanced benefits like telemedicine or wellness programs. Review insurance claims for accuracy. When issues arise, be organized, pleasant and persistent in pursuing reconsideration of disputed coverage.
  4. Take advantage of health savings accounts (HSAs) and flexible spending accounts (FSAs): HSAs and FSAs are offered by many employers and allow employees to save pre-tax dollars for health care expenses. If available, either can be a tax-efficient way to cover out-of-pocket health care expenses.
  5. Develop a good relationship with your primary care physician: The better your physician knows you, your medical history and your life circumstances, the better advice they can give you to stay healthy.
  6. Get invested in your health: Get regular checkups. Take advantage of preventive care like vaccines for pneumonia, shingles, and the flu. Be proactive, open and honest regarding issues you may be experiencing. Understand the rationale and cost-benefit of proposed tests or procedures and speak up whenever you have concerns.
  7. Allow your primary physician to coordinate care: Avoid going directly to a specialist without consulting with your primary physician. They need to be in the loop and can help avoid redundant testing and treatment.
  8. Manage prescription medicine wisely: Take prescribed medication as directed and check with your physician periodically to ensure it is still effective and necessary. Substitute generics when appropriate and take advantage of medicine-through-mail options to reduce cost.
  9. Prepare for emergencies: Take the time to consider what constitutes an emergency so you can be prepared when one arises. An emergency room is staffed and designed to diagnose and treat acute injuries and illnesses quickly to save lives. As a result, emergency care is expensive. Non-emergencies are best handled by your primary care physician or an urgent care provider.
  10. Plan for surgery and procedures: To best manage your potential out-of-pocket expenses, you need to do some upfront planning. Check to see if your providers are in network. If any are not and no alternative is available, you may be forced to pay a higher portion of the related expense. Also, ask if your surgery or procedure can be performed at an outpatient clinic. Procedures are typically less expensive there than in a hospital setting.

As consumers, we cannot change the system, but we can be proactive and smarter in managing our health care choices. A little diligence can provide us a healthier and wealthier tomorrow. 

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