The month of November brings crisp fall weather, colorful leaves in Northern climes, and for many people who get health care through their jobs – open enrollment! Some are finding a different set of choices facing them this year.
While the pace of health care inflation has slowed a bit in recent years, prices of health care and health insurance are still going up – just a little more slowly than in the past. The rising cost of health benefits is still a major headache for employers. For several years, employers have tried one technique after another to try to hold down health care costs: self-insuring to cut back on the profit margin of health insurance companies, favoring plans that aggressively manage expensive services, and increasing employee cost-sharing. Now, some employers are trying to see if a technique that most use for employee retirement benefits could work for health insurance too. They’re moving away from a defined benefit approach – where the employer pays for health insurance, minus employee premiums and cost-sharing – toward a defined contribution approach. They are offering their employees a fixed dollar contribution toward health insurance and leaving it to employees to pick the plan. This is analogous to moving from a pension plan to a 401(k).
Our goal is to help you make the most of the $$ you spend for health insurance and health care. Sometimes it seems like the health care system is set up to confuse and intimidate you. We'll help you negotiate the maze of selecting an insurance plan, making sure you make the most of your benefits, and using health care wisely.
Choosing health insurance involves lots of tradeoffs – between lower cost versus more choice, and between lower premium cost versus higher deductibles and copayments. Say you have a choice between an HMO and a PPO. How do you choose?
Pros and cons of HMOs
HMO stands for health maintenance organization. The original idea behind HMOs was that if a group of doctors was responsible for the whole cost of health care for a group of people, they would have an incentive to provide preventive care that could help people avoid expensive medical problems, and provide good care for people with chronic conditions like high blood pressure and diabetes so they could stay out of the hospital. This would be good for people’s health, and good for cost control.
Confused by the jargon of the health insurance industry? Here's some help.
Coinsurance: A percentage of the bill that you have to pay directly. For example, if your coinsurance for hospitalization is 20% and your hospital bill is $10,000, you will owe the hospital $2,000.
Copayment: A fixed amount that you have to pay directly. For example, you may have a copayment of $20 for each doctor visit.
Cost-sharing: The insurance industry term for the combination of coinsurance, copayment and deductible that you are responsible to pay under your policy.
Deductible: The annual amount that you have to pay out-of-pocket before your insurance kicks in.