A look at rising premiums and what Anthem doing to help control them

Health care costs and premiums go hand-in-hand

It’s a question we’ve heard hundreds of times: “Why are my health care premiums going up when I only went to the doctor once?”

A lot of people think their premiums increase only because they’ve used too many health care services — like what happens to your car insurance if you get too many speeding tickets. But that’s not how individual health plans work. Premium adjustments are based on age, location and — most importantly — the expected cost to pay members’ claims in the upcoming year. As that cost continues to go up, premiums go up. Even for people who don’t use a lot of health care services.

The fact is that costs are rising rapidly within the whole health care system. By 2019, the U.S. will spend about $4.4 trillion on health care.  Yes, trillion with a “t.” It’s hard to wrap your head around a number that big, isn’t it? Here’s what it really means:

• Almost twice what we spent in 2007
• About 1/5 of our economy
• More than $13,000 per person each year

Unfortunately, there’s no magic bullet to change the direction we’re heading in. But here’s where we can start …

When health care costs go up, often premiums go up, too. When premiums go up, families may have less money to spend on gas and groceries and, well, everything else. That’s where the problem really hits home.

Where does the Premium go?

• 87% Medical services and products
• 10% Administrative costs
• 3% Health insurer profits

Based on industry averages, 87% of the premium is used to pay for health care services members receive — things like doctor visits, hospital costs and prescription drugs.

On average, 10% of the premium pays for administrative services like claims processing, enrollment, billing, provider credentialing and complying with government rules.  Some of our efforts to control the rising cost of care are also considered administrative services.

That leaves 3% of every premium dollar as a buffer to make sure claims can be paid if there’s a significant spike in health care spending, as well as for profits and paying taxes. We also use this part of the premium to make investments in new products and to improve the lives of the people we serve and the health of our communities.

 

Here’s a look at why the cost of those services keeps going up:

More costly technology, used more often

Medical technology is the key driver of health care spending, accounting for an estimated half to two- thirds of spending growth.3 As new tests and more costly equipment come out, we can expect to see an increase in the use of these services — even though they’re not necessarily more effective than existing, less expensive services.

Prescription drug costs and use:

Nearly two-thirds of Americans fill a prescription during the year — and the average American fills 12. From 1990 to 2008, spending on prescription drugs increased nearly six times over — making drugs the fastest-growing segment of health care spending.

Unhealthy lifestyles

Preventable risk factors like obesity, smoking and drug abuse play into increased use of health care services and can lead to chronic diseases, which account for 75% of U.S. health care spending each year.5,6,7

Services people don’t need

Tests that have already been done. Treatments used despite a lack of proof they work.  The costs add up. On average, one-third or more of procedures performed in the U.S. appear to be inappropriate or offer questionable benefits to patients.

Health care fraud

The National Health Care Anti-Fraud Association estimates conservatively that 3% of all health care spending is lost to health care fraud each year. That’s $68 billion a year — or more than $180 million per day.

Complying with laws

It’s estimated that private health insurers nationwide spend more than $339 billion a year to comply with government regulations. Some of this money is used to pay for required services like screenings. But more than half is spent on regulatory costs such as filing and reporting.

Cost shifting

There’s a significant difference between Medicaid and Medicare reimbursement rates and the rates of private insurers. One report estimates this leads to health care cost increases of about 10%, or $1,788 yearly, for a typical family of four that has private health insurance.

Inflation

Just as we spend more today for a gallon of milk than we did 20 years ago, we spend more for health care services. This health care price inflation outpaces general inflation and drives 51% of the growth in health care spending.

 

Here are some key things Anthem is doing to try to control costs:

Helping members save money on care

The discounts we negotiate with providers help customers save millions of dollars on health care every year. We developed a program that uses Google Maps, an online tool and targeted outreach to help members avoid costly emergency room visits in nonemergency situations. And we’ve started a program to help members avoid high costs for services like MRIs and CT scans.

Working to lower drug costs

Our pharmacy benefit manager helps members get more value for their money through outreach programs that aim to improve medication compliance and encourage use of generic drugs when the doctor agrees they’re appropriate. And we’re working to promote better use of medicines by supporting new ways to reduce harmful drug events, among other activities.

Empowering members to take charge of their health

We work with members to help them reduce risk factors like obesity and smoking. For example, members can take a health assessment to find out about their personal risk factors and access information about diseases, medicines, procedures and treatments at anthem.com. For members who already have chronic or complex health problems, we offer programs with nurses to help them manage their health.

Promoting quality, not quantity

We’re encouraging treatments that generally work and are beginning to pay doctors based on their performance.

Finding and fixing fraud

We have dedicated teams that work to prevent, find and recoup dollars lost to fraud.

Making our operations more efficient

As part of our efforts to control customers’ premiums, we’ve taken steps to control our own costs for many years. This includes investing in technology that streamlines claims payment, helping to reduce costs while improving customer service.

Anthem continues to be a trusted choice in part because of our history of financial stability. We’re committed to being here for our customers when they need us — and we can only do so if we’re managing our financials responsibly and operating profitably.

As health care costs keep rising, we’ll continue to focus on what’s most important to our members: helping them improve their health and save money on care.

 

How will health care reform affect costs?

The Affordable Care Act will have wide-ranging impacts on the health insurance marketplace, especially for individuals buying coverage on their own. There are new rules for insurance premiums, a new framework for benefits, new taxes and fees, and, in some cases, government subsidies available.

These new changes mean that insurance premiums will increase for some and decrease for others. Some parts of the law are likely to raise costs for members. For example, the cost of new mandated benefits, taxes and fees will be included in premiums. Additionally, new rules for insurance premiums mean that some individuals will lose discounts, while others will benefit from the elimination of surcharges. The bottom line is that the impact of reform can vary significantly from individual to individual.

As we continue to receive and evaluate health care reform regulations, we’ll keep you informed about how the law will affect plan members. Find the latest information at healthychat.com.

 

This content is provided solely for informational purposes: it is not intended as and does not constitute legal advice. The information contained herein should not be relied upon or used as a substitute for consultation with legal, accounting, tax and/or other professional advisors.  All information provided directly from Anthem BCBS

How does Health Insurance work?

When purchasing health insurance you need to understand a couple terms that will help with the decision process.  I’ve included a brief explanation of these key terms to help you search for a health plan that will fit your specific needs and budget.  Please remember the cost for medical exams, procedures, and hospitalization are extremely high so you need to have health insurance to limit the amount you will pay in the event of a serious illness or injury.  It is also important to note that health insurance is not designed to pay all of your medical costs; insurance is simply designed to limit your exposure and assign the risk of paying high medical costs to the insurer.

Premium

So let begin with your monthly bill or the monthly premium.  This is the amount you pay on a scheduled basis.   For instance, if you get insurance through your employer, you would pay your part of the premium each payday.  If however you have an individual or family plan outside of work, you would pay the full premium cost on a monthly, quarterly, semi-annual, or annual basis.  You will need to pay your premiums on time or the plan can lapse or be cancelled, then you risk exposure to those high medical costs.

What is a negotiated rate or discount? 

The greatest benefit in having health insurance is that the insurance company actually negotiates with doctors and hospitals for the best rates.  These rates are then passed on as a discount that you pay, up to your deductible and according the plan co-insurance.  You may feel that you are paying all the bills but the insurance is already at work providing cost discounts and coverage according to your plan benefits.

Deductible

What is a deductible?  The deductible is an amount of money you spend annually before the insurance starts paying.   A typical deductible may be $1000 for the policyholder (Individual) and $3000 for the family.   For example, you may have an MRI scheduled, which can cost as much as $3000.   If you have a $1000 deductible you would pay the first $1000 of the bill.  You have now met your annual deductible and the insurer will begin to pay part or all of the remaining $2000 based upon your co-insurance.

Co-insurance

You may have heard of an 80/20 plan in the past?  Basically this means that once you have met your deductible the co-insurance kicks in.  This is a way the insurer helps with expenses and protects you from paying a large portion of medical costs up front.  With the MRI example you have now met the $1000 deductible the co-insurance begins.  If you have an 80/20 plan that simply means the insurer pays 80% and you pay 20% until your out-of-pocket maximum is met.  So, with the $3000 MRI bill you pay the deductible ($1000 in the example) and now the insurer pays 80%, or $1600, of the remaining $2000 bill.  Your responsibility would be 20% of the $2000 bill or the remaining $400.  So with the MRI example of a $3000 in costs, and considering you have a $1000 deductible 80/20 plan, your total expenses would be $1400 and the insurer pays $1600.  Of course this example is considering you have not had any medical expenses previously applied toward the deductible and it is also important to note that co-insurance can and will vary from 100% to 50% based upon the plan design.

Out of Pocket Maximum

The out-of-pocket maximum is the maximum expense you will have any given year for your medical costs.  In other words, you pay the deductible and a portion of co-insurance to a limit on an annual basis.  This is the out-of-pocket maximum and limits your exposure in the event of a serious illness or injury.  All health insurance plans have an out-of-pocket maximum and this information can be found in the benefit brochure or simply ask your Agent.

Preventative and Child well care

As of September 23, 2010 all health insurance plans now pay 100% of nationally recommended preventative care and child well care visits.  This simply means you have no costs when visiting the doctor for preventative care services.  It is important to note your physician needs to code the service as preventative to ensure the insurance company pays 100% of the cost.

Copay

The Copay is the amount you pay for a doctor office visit, prescription coverage, or specific medical expense.  For example, many plans offer copays for a doctor office visit and you simply pay the copay amount such as $25 and the insurance company pays the remaining costs.  Many plans offer copays however there are health plans that do not offer this benefit or there can be limitations as to the amount of copays offered per person per year.  Please look over the benefit summary of your plan or ask your Agent the benefits of your plan.

This is just a brief explanation of key terms and I would suggest reviewing the benefit brochure offered by the insurers and your Agent before purchasing any plan.  It is essential for you to understand how your plan works so you can get the most benefit from the coverage offered.  By understanding health insurance basic terms you also have the opportunity to shop for the plan that best fits your specific needs and budget.

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College Students need Health Coverage too.

Did you know that many Colleges and Universities require students to have health coverage? In fact, many Universities require specific coverage for graduate student and medical students.

Most of these program do offer health plans that are sponsored through the University however these plans are often quite expensive and there are better and more affordable options available. I recently worked with a client that attends Indiana University and we were able to get her a plan that was considerably less expensive than the school sponsored program yet offered much better coverage.

With school just days away now is the time to find the plan for your college student. We can easily show you multiple plan options that will fit your son or daughter’s specific needs. All you need to do is drop me an email or give us a call at the office 317-842-2210.

Thank you and please enjoy the beautiful weather while it lasts.

The advantages of the Indiana Insurance Group

Why use Indiana Insurance Group when shopping for health coverage?

This is a phase I’m very familiar with and honestly it is a great question.  My answer is quite simple, you need to take advantage of the years of experience Indiana Insurance Group has to offer and use this experience to shop around for the best product and price.  Considering all insurance rates are provided directly from the insurance companies and there is no additional cost or expense when using IIG, you are missing the opportunity to actually save on your health costs.

Shop around for the plan that best fits your needs from highly rated insurance companies such as Anthem, UnitedHealthcare, Medical Mutual of Ohio, Humana and more.  We will show you multiple plan options from a variety of health insurance providers so you can make the best choice.  You also have the option to compare plans online or upon request we can simply email an illustration of plan options for your review when convenient.  One guarantee is that your information is never sold or shared so you don’t need to be concerned about unwanted calls or solicitation.

Our goal is to simply find a health plan that fits your specific needs and budget.  We all have different insurance needs and the insurers offer a number of different products to fit those specific needs such as co-pays, HSA’s or prescription coverage.  For example, the needs of someone just graduating from college aren’t going to be the same as a young family of 3 or someone approaching retirement.  This alone is a great reason to use us when shopping for health coverage, but there is more.  If you have a pre-existing health condition not all insurers are going to look at that condition the same way.  Some insurers may place an exclusion rider on a pre-existing condition while others will not.   A situation like this is often not acceptable; this may be why we need the coverage for in the first place.

In addition, you can contact us anytime you have questions, concerns, or just need a little help.  While many of the insurers we work with have excellent customer service it’s often a little difficult to navigate the automated phone systems that have unfortunately become the mainstay of larger companies today.  Not here, you will always speak with a live person and we are happy to help.  There is the rare occasion we may not be able to advise you because of Health Privacy laws or regulations, however we can certainly make it easier by point you in the right direction.

Honesty and integrity is the cornerstone of our business.  Please drop us an email or call anytime we can help.