October 27, 2010
Health 101: How We Lowered Our CostsBy C. Edmund Wright
I just got my health insurance renewal premium for 2011, and our family's cost went down 19 percent. Yes, down! -- and all because we did the opposite of ObamaCare for our family.
Now I am not an Ivy League grad; nonetheless, I figured out how to dramatically lower my health care costs two years in a row. And by costs, I mean both insurance premiums and overall expenditures for health care -- without sacrificing anything.
In other words, I have succeeded in "bending down the cost curve" for our family.
Moreover, I submit that this case study -- of my rather typical family of five -- is a valid microcosm of how our country can address most of our nation's health care cost issues. And again, it is by doing the very opposite of what our government is trying to force down our collective throats.
So what was this inflation-busting miracle? Really, it was simple. We treat health insurance the same way we treat other insurance, such as home and auto. In other words, we properly view insurance for what it is -- a method of protecting financial assets by guarding against the financially catastrophic incident that may be looming on the horizon. Period. It cannot protect our health, and it is not a right.
In other words, health insurance is not what we use for band-aids and sniffles and flu shots and routine visits and the like. Nope. We simply pay for those out of pocket with something called "cash." GASP!
Health insurance is what we rely on if the major heart problem or cancer issue crops up. You know, "the big one" that would wipe us out financially. And this is far from radical.
This is how everybody used health insurance for many decades. It was even called "major medical." Too bad it is not called that today, because that name clearly states what the concept of insurance is all about. Major medical is a logical and descriptive term, while "health care" is a fuzzy emotional term that confuses.
And it was not that long ago that people relied on "major medical," though you don't hear that term used much anymore. The concept is very close to -- though not exactly the same as -- what is now called a health savings accounts (HSA).
And this is something that almost everyone could do. It is common sense and not hard to understand. By taking insurance companies out of the mix of routine services, we have reduced the cost of routine services -- and saved a ton of money on the insurance premiums. The bureaucratic involvement in every transaction is a huge cost that no one seems to calculate when trying to reduce costs.
In fact, ObamaCare infuses even more bureaucratic involvement in every aspect of our life. How can this possibly work? It cannot, of course, not to mention the fact that it is offensive and totalitarian.
Actually, I have always wanted a program like this, but in North Carolina, this option was not available to us until 2009. While a pure major medical option was not available, an HSA with a ten-thousand-dollar deductible was. We took it, and we immediately saved eight thousand dollars off of our premium -- almost seven hundred dollars a month. That seven-hundred-per makes it rather easy to pony up for a few out-of-pocket items during the month.
And after a year of being on that program, and saving the eight thousand for a year while paying for a few more small items out of pocket, we just got our renewal premium -- and as stated, it went down 19 percent. That's now a total of some nine thousand dollars per year in savings over the 2008 premium for our family. That's now 750 dollars a month in our pocket.
Moreover, we have actually saved more than that. Recently we had a pharmacy totally confused by our HSA account, and they were embarrassed to tell me through the drive-through that a scrip I was picking up was going to cost me about 245 dollars. In other words, I was going to pay the entire price -- and the pharmacy was going to report it to my HSA in case we did go over the ten-thousand-dollar deductible.
I said, "Give me the cash price." In other words, forget insurance -- just sell me the scrip. The cash price? Only 139 bucks. That's right. Simply by taking the bureaucratic function off the transaction, I saved over a hundred dollars. You know, how I buy almost every other product or service in my life.
Now, there is nothing extraordinary about our family or our health or anything else that makes our example irrelevant to the majority of the country. Quite the contrary. This is simply common sense.
And it does not require a big income. As stated, the out-of-pocket expenses are more than paid for by the greatly reduced premium costs. This only makes sense. There is no way a family will get a net savings over their lifetime by having pharmacy and doctor's office and insurance bureaucrats having to administer every pill and procedure. That cannot bend any cost curve down.
What it does require, however, is an ability to rethink what health insurance is. It requires an ability to set emotion and preconceptions aside and to focus on what we are talking about. And what we are talking about here is nothing more than a simple way of planning for financial risk.
And it makes no sense for us to all have a one-size-fits-all financial planning program tied to health. It makes no sense for any of us to have a bureaucrat -- or three -- between us and every financial medical transaction we do.
I fully understand that this will be a bit stickier of an intellectual mountain to climb for those on job-related plans, but it is a valid answer nonetheless. Reducing health care costs really is easy...so easy that even a Harvard grad can do it. (Okay, maybe not).
The author has been writing about health care for American Thinker for several years.