Becoming Your Own Health Care Cost Advocate

Financial Planning Association

A Harvard Medical School study earlier this year pointed out that nearly half of all bankruptcies, involving 700,000 American Households and more than 2 million people annually, are attributable to illness or medical debt.

And in June, the Commonwealth Fund, a nonprofit health-policy research group in New York, reported that people with high-cost, high deductible health insurance are catching up to the uninsured when it comes to medical debt. That means that rising uninsured medical costs are not just for low-income Americans anymore.

As the population ages and there is no move toward a lower-cost national health insurance solution, consumers need to be aware of ways to control medical costs — preferably before they get sick. Smart consumers understand they will have to become the purchasing agent for their own health care. Some ideas:

Deal with your weight: While dealing first with the numbers on your bathroom scale will have immediate health benefits, it will also make your health insurance options and potential out-of-pocket costs more affordable over time. A recent Stanford University and Rand Corporation study reported that lifetime medical costs related to diabetes, heart disease, high cholesterol, hypertension and stroke among the obese are $10,000 higher than among the non-obese. The study added that among the overweight, lifetime medical costs could be reduced by $2,200 to $5,300 following a 10 percent reduction in body weight. This doesn't apply only to individuals buying their own insurance — employers are increasingly offering pricing incentives for healthier workers. Don't be left out.

Grill your agent or HR person: Whether you buy health insurance through an agent or your employer, insist that they explain exactly what you're getting for your premium, and where deductibles do and don't apply.

Discuss potential cost of a diagnosis: If your physician diagnoses a particular illness that requires tests, surgery, prescription drugs, a hospital stay or ongoing therapy, be very blunt about what you'll be charged, from the doctor's bills to ongoing ancillary costs associated with treatment. Ask the doctor or his office manager to possibly negotiate a discounted fee for service. It's possible to get discounts through cash payments as well.

Ask for generics and samples: Many physicians are willing to recommend a generic substitute or at least supply you with a few samples of the drug they're already prescribing. While doctors can't get away with passing sample drugs to all their patients, always ask. As long as they are prescribing the medication, samples with the proper dosage can provide cost savings to patients.

Politely question all physician recommendations: If in your research you find that more than one drug or course of treatment may be effective in your situation, always ask the physician why they made their particular choice. Physicians, hospitals and other players in the health care system face pressure from suppliers to pick their product or brand, so if you're paying for the most expensive form of treatment, you need to know why it's the best choice.

Check local pricing resources: In non-emergency situations, you should always compare prices on treatments. Check with local medical boards and state health officials to see if they have online databases on costs for various medical procedures. Also, if there is a support group for your condition, talk to members about what they paid locally for care.

Talk to a financial adviser about planning for long-term care: If you or a loved one are diagnosed with a chronic illness, that's a financial issue that requires a plan. As tough as it may be to focus on money issues during an emotionally stressful time, make an appointment with a CERTIFIED FINANCIAL PLANNER™ professional to discuss affordability options that will safeguard your assets, including Medical Spending Accounts that can backstop out-of-pocket costs on high-deductible policies.

Begin negotiations before there's a problem: The best time to speak with hospital bean counters isn't when you're behind on your payments. Once a diagnosis is made, either you or someone you designate as your agent needs to contact the hospital business office to check on payment schedules and possible discount plans if you are uninsured or fear your insurance may not cover a significant portion of costs. Any creditor appreciates a customer who's willing to come to the table first.

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September 2005— This column is produced by the Financial Planning Association®, the membership organization for the financial planning community. If you use all or part of this column, please credit FPA® and provide a link to FPA at www.FPAnet.org/Public.

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