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Decoding Health Insurance Costs in the US

Understand health insurance terminology, costs, and factors affecting expenses in the US healthcare system. Learn about premiums, deductibles, copayments, and different insurance plans. Explore why healthcare is expensive and where the money goes.

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Decoding Health Insurance Costs in the US

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  1. Health Insurance

  2. “You have to spend money to save money” Respond to this statement.

  3. On this presentation, if a word is italicized, you should make a flash card over it! • There may or may not be a word quiz in your very near future Flashcards

  4. DRG: fees based on Diagnostic-Related Groupings • Federal guidelines to keep costs reasonable • Premium: fee paid (usually monthly) to the insurance company in return for coverage • Ie $500/month • Personally, I pay around $20/month as a single person • “dependents” (children) or adding a spouse will increase your premiums • Deductible: amount paid by patient to the medical provider before insurance company will pay Definitions

  5. Co-payment: a specific amount of money paid for a service or medication visit • Ie $15 for an office visit • May or may not contribute to the deductible • Maximum out-of-pocket: the maximum amount of money the patient will pay • Once the max is reached, the insurance will pay in full • Co-insurance: where both the patient and the insurance company contribute to the cost of the service • May be used instead of a copayment OR in addition to it Definitions

  6. The higher the deductible, the lower your monthly premium Rule of Thumb

  7. Healthcare is a business in the US that makes up 15% of our economy • In 2004, $1.9 trillion was spent on health care • That comes out to $6000 per person! Healthcare Costs

  8. Predict: Where does the money go? • Expenses: • Cost of medical technology • Insurance administration • Lawsuits and malpractice • Aging population • Pharmaceutical (Drug) costs • Social problems • Ie. Violence, drug abuse, teen pregnancy, childhood obesity Why is Healthcare so Expensive?

  9. Services • Salaries • Products and supplies • Research and education Where does the Money Go?

  10. Fee for service: money that is paid at the time of service • Insurance plans • Definition: an agreement in which a person being insured pays a regular fee to an insurance company, and, in return, the company pays for certain healthcare expenses • Ie annual preventative care or catastrophic events • Yearly physicals, cancer treatment Methods of Payment

  11. Groups (work/employer) • Individuals • Self-employed • Employer does not offer insurance or you decide not to purchase it • Government benefits (military) Where Do You Get Insurance?

  12. Managed Care • Government Plans Types of Insurance

  13. Focuses on prevention • The Plan manages your care • Little booket that details your responsibility and protocol for seeking care • Ie needing a referral (that is, a recommendation from your doctor to see a specialist) • 2 types • HMO • PPO Managed Care

  14. Stands for Health Maintenance Organization • Group of physicians that provide complete coverage for members • Patient required to visit HMO doctors/facilities • Also must get referral to see a specialist • Lower premiums, smaller copayments BUT less freedom Managed Care: HMO

  15. Stands for “Preferred Provider Organization” • Very similar to an HMO, but with more freedom • You are still restricted to an “in-network” provider • However, you do NOT need a referral to see a specialist • May have to pay more in premiums or copayments, but you have more freedoms PPO

  16. Medicare • Federal Government Program • Provides healthcare for people over 65 or those with disabilities • Limited coverage • Many older individuals still need to purchase other plans so supplement their coverage Government Plans: -Care vs -Caid

  17. Medicaid • State run program • Pays for some coverage for poor or low-income people • Varying eligibility on a daily basis Government Plans: -Care vs -Caid

  18. There are a multitude of other plans out there, but HMOs, PPOs, and government plans are one of the most popular • Other Plans: • HDHP: High Deductible Health Plan • This means that you have a high deductible, but lower premiums • What does that mean in plain English? • Purchased “just in case” of a catastrophic event • Why would this plan be a good idea? • Comes with a Health Savings Account (HSA) • Savings account that can be used for medical expenses that is not taxed like accounts are • Money can roll over, year to year, if not used • Can be used on things like copays, deductibles, coinsurance, even childcare Other Plans

  19. Traditional Plans • Point of Service (POS) Plans • Flexible Spending Account (FSA) • Special savings account that is taxed differently by the government • The money can be spent on things like copays • Use it or lose it: If you don’t spend it, you will use it at year’s end! • Often comes with a debit card to access funds Other Plans

  20. Get into groups of 4 • 2 of you will be insured • You have to pay a monthly premium of $250, BUT you also get care/treatment at a lower price • 2 of you will be uninsured • You only have to pay for treatment • Use your budget handout sheet to keep track of your expenses and answer the follow up questions to analyze your budget Let’s Play a Game

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