Health Insurance Costs

Keeping up with the cost of your health insurance is one thing. Understanding how your health insurance dollars work for you is quite another. The topic is confusing, and many people choose to ignore it altogether. But for the savvy health care consumer or the average Jane or Joe just trying to get their mind around the basics workings of health insurance, here are the answers to some commonly asked questions.

Q: Why does the cost of health insurance keep rising? A: There are a few reasons. First, the latest treatments can be very expensive. For example, some cancer patients take drugs and treatments can that cost up to $30,000 each month. An MRI machine can costs up to $3 million. Another reason is that people are using more medical services than they used to, and this drives up the prices for everyone. Unnecessary or duplicative medical tests, can also which are extremely common, add to these rising costs. There's also longevity. People are living longer and getting sicker. Longer lives also translate as more years of insurance coveragemedical care. In fact, in the U.S., 125 million people have at least one chronic disease that uses up 75 cents of each health care dollar.

Q: Why is it cheaper to see an in network provider?
A: Managed-care plans have relationships with selected doctors, hospitals, clinics and other health care providers. Those providers have an agreement to provide comprehensive health services to members at a reduced group rate. Costs are further kept in check because billing and administrative functions can be centralized with the chosen provider networks.

Q: How do health care providers calculate my out-of-pocket expenses?
A: It depends on the cost of the health care service you receive, as well as on your insurance plan. For example, many plans will pay 80 percent of your total medical bill once you've met your deductible, and then you are responsible for the remaining 20 percent. If, however, your doctor charges more than "what is reasonable and customary" for a specific treatment, you may be responsible for the difference. Here's an example:

You got an X-ray. Your insurance company's allowable charge (what is reasonable and customary) is $150. For whatever reason, your doctor charges $225. If you've already met your deductible, you'd be responsible for 20 percent of the bill, plus the additional $75 the doctor charged above what the insurance company states it's willing to pay.

Q: How can I find out what my insurance company deems as reasonable and customary for a specific service? A: First, find out the medical term for the service you're inquiring about. Then, call your insurance company and ask them what is the maximum amount they're willing to pay for that service. These steps could save you from an unpleasant surprise when you open your next medical bill.

Want to learn more about health care costs and trendshow the health care system works? Visit whatstherealcost.org.

Reprinted with permission from myRegence.com