Americans spend more on healthcare than the citizens of any other nation, and it’s not even close. Not only do we spend more, but the cost continues to go up. In 2019, (before the pandemic essentially unmoored our ability to make educated inferences from snippets of short-term economic data) the average American household was spending roughly $5000 per person on healthcare needs. This, according to analysis provided by the Bureau of Labor Statistics Consumer Expenditures Survey, accounted for a 101% increase in healthcare costs since 1984.
While it may feel obvious to American consumers that healthcare costs have risen so precipitously, it may not be as obviously clear what’s driving this surge. Believe it or not, the costs for prescription drugs and medical services have actually gone down by roughly a third since the 1980s, when adjusting for inflation, according to CNBC.
So what’s behind this brutal rise in the cost of healthcare? CNBC reports that health insurance costs have increased by a staggering 740% since 1984. While more than half of Americans get their health insurance through an employer, out of pocket costs still carry a hefty burden. Healthgrades reports that some 25% of Americans with insurance still indicated that they struggle to meet out of pocket costs like deductibles and annual premiums. Certainly, the fact that out of pocket costs have increased by 71% in just the decade between 2009 and 2019 is at least one reason for this finding.
And as we struggle through the current inflationary trend, these costs are more than just imposing. For some, these costs can be downright devastating. For many individuals and families, rising healthcare expenses are taking a heavy toll on the overall financial security of already straining household budgets. In our recent features, we’ve offered tips on how you can save money on your utilities and your groceries. But for many Americans, healthcare expenses can be more unpredictable and more difficult to manage than these everyday expenses.
Fortunately, there are some strategies you can employ to preempt, lower, or offset your healthcare expenses. While you can’t control some things—like the high cost of insurance premiums or the cost of certain procedures—there are a lot of ways that you can reduce the financial burden imposed on your household by your healthcare needs. With a comprehensive understanding of your coverage and careful decision making, you may be able to reduce your healthcare costs without sacrificing the quality or immediacy of your care.
1. Understand Your Insurance Policy Inside and Out
The first step is perhaps the most challenging for many consumers. Insurance rules can be complex and there are a lot of different parameters that you should be aware of. For instance, you may be responsible for different copays, deductibles, and out-of-pocket expenses depending on whether your appointment is with a general practitioner, specialist, emergency room doctor, outpatient physician, in-home care provider, or otherwise. Broadly speaking, you should know what your copays and deductibles are for each of these treatment options.
Be aware of the expenses for which you will be personally responsible and make decisions accordingly. While you should always go directly to the hospital for an emergency, seeking treatment for a minor injury through your family doctor or an urgent care facility will usually come with a lower overall price tag as well as a lower copay.
It’s also important to know what the cap is for your potential out of pocket expenses. Until you’ve reached this limit, or met your deductible, most diagnostic tests or treatments will likely come with additional expenses beyond what your insurance covers. Understand these expenses and make treatment decisions that prioritize both your health and the costs associated therewith. If you are unsure of how to interpret the insurance policy information furnished by your provider, reach out to a representative with questions. If you receive your health insurance through an employer, you may find the answers you seek through your Human Resources Department.
2. Stay In Network
One of the easiest ways to get slapped unexpectedly with a huge medical bill is to visit a doctor who is out of your health insurance provider’s network. Most insurance policies will provide their own list of in-network physicians. In the majority of cases, a visit or procedure would only be eligible for the full scope of your policy’s coverage if the provider is listed as part of this network. This is generally true for everybody from general practitioners and large hospital facilities to specialists and outpatient treatment facilities.
In some cases, your insurance may offer partial coverage or reimbursement for visits or treatments from out-of-network providers. In other cases, your insurer may not provide any coverage at all for a physician who is out of your network. The financial difference can be fairly substantial depending on the nature of your visit.
So before you make an appointment with any new provider—even those for which you have received direct referral from another physician—make sure this provider is listed as part of your policy’s network. You can typically do this either by searching through the online database made available by your insurer or by contacting a specific doctor’s office and finding out if they accept your insurance.
3. Take Advantage of Urgent Care
Regardless of your deductibles and copays, visiting an Urgent Care clinic in your vicinity will invariably be more affordable than visiting the emergency room. According to Kiplingers, the average cost of an emergency room visit is $1,757. The average cost of a visit to Urgent Care is $153.
Granted, there are considerable limitations to the nature of the treatment you can receive at Urgent Care relative to an actual hospital. So once again, if you are faced with a truly serious emergency, go directly to a hospital. A hospital emergency room should be the only stop for those with severe injuries or illness, prenatal emergencies, coronary or neurological episodes, poisonings or overdoses, and any condition where the life of the patient is at risk.
On the other hand, Urgent Care could be an ideal and affordable way to receive basic attention, treatment, and prescription orders for minor fractures and sprains, superficial infections or allergic reactions, and low-grade illnesses like pink eye, strep throat, and the common cold.
4. Use Every Strategy Available to Save On Your Medications
Prescription medication can be extremely costly, and every insurance plan has its own fairly complex formula to determine what it will and won’t cover. This means some medications are covered while others aren’t. In some cases, your insurer may cover a larger percentage of the cost of one medication versus the other. Or it may even mean that two medications which are identical in every single way except for the name of the companies manufacturing them can nonetheless come at dramatically different costs.
The good news is, you do have options as a pharmaceutical consumer. But in order to learn more about these options, it’s up to you to ask questions, both to your prescribing physician and to your pharmacist. These healthcare professionals may be armed with tips on how to save. Medline Plus notes, for instance, that the generic version of many drugs can cost a fraction of the price as compared to the name brand. Always ask if there is a generic version of a prescribed drug available.
You can also ask your physician if there are more affordable medications that might be used as an alternative to a more costly prescription. In addition, there are ways to purchase medication beyond the traditional pharmacy counter. Some medications may be available through mail-order and online vendors for a reduced price. Naturally, you should do your due diligence and ensure that you are ordering from a trusted provider. Ask your physician or pharmacist for advice on finding more affordable medication through these alternative outlets.
And finally, don’t forget to look for discounts from the actual manufacturer. Many pharmaceutical companies will provide discount codes or reusable coupons to help offset the cost of their more costly medications. In some cases, these discounts can actually be quite significant, and may reduce the out of pocket cost of your medication by a meaningful amount.
5. Look for a Co-Pay Assistance Programs and Pharmacy Membership Clubs
There are a few other ways to preemptively save money on your prescription drug costs across the board. A number of drug manufacturers offer copay assistance programs that are provided on the basis of your income and financial needs. Fortunately, because many prescription drugs are so expensive, these programs are extended to consumers from a wide spectrum of income backgrounds. According to Kiplingers, some programs remain accessible to households earning in excess of 300% to 400% of the poverty level.
In other words, don’t be afraid to apply for one of these programs, even if you think your income is too high to allow you to qualify. You might be surprised at the assistance for which you are eligible. Another highly advisable strategy, and one which is open to consumers of every income level, is participation in a pharmacy membership benefits program. Most chain pharmacies, like Walgreens, CVS, or Rite Aid, will provide access to membership in a discount medication club. You may pay an annual membership fee to join and remain in this club, but you will generally save far more in just a few months of prescription drug purchasing than you’ll spend for a full year of membership. In most cases—and especially for those with significant monthly prescription medication needs—membership in one of these benefits clubs is well worth the initial outlay of money.
6. Take Advantage of Your Insurance Policy Benefits
Medline Plus points out that when it comes to your health insurance terms, there’s far more to it than just expenses and coverage limits. There are also enhanced benefits that come with your insurance policy, but it’s up to you to understand what they are and to take advantage.
For instance, says Medline, many insurance providers offer full coverage for preventative measures like regular health screenings and physicals. Some providers also provide rebates, discounts, or even full coverage for gym membership and other fitness expenses. You may also be able to access an array of programs designed to provide wellness support including smoking cessation, addiction counseling, and general health assessment programs.
If you’re not sure what your benefits are or how you can make the most of them, reach out to your insurer (or HR representative if you receive coverage through an employer) to find out if you have access to a case manager or health advocate. This individual may be able to help you identify and leverage your available benefits. And if you are managing long-term care needs for chronic conditions like diabetes, heart disease, or disability, a case manager may be able to help you devise a more comprehensive treatment plan that allows you to both make the most of your existing benefits and to cut treatment costs wherever possible.
7. Ask for Alternate Surgical Locations
In most cases, when you need a surgical procedure, you will be referred by a primary physician to a preferred surgical site. But this referral is by no means mandatory. Anytime you need a procedure, be aware that you may have a variety of options. There may be some meaningful price differentials between the cost, for instance, of surgery in an emergency hospital as opposed to an outpatient facility.
There may also be price differences based on geography. You may be able to save a significant amount of out of pocket money on a surgical procedure simply by seeking treatment in a different zip code. Before you accept a surgical referral at face value, ask your physician for some alternative options. Again, you should be sure that any treatment you seek is in-network, which means you’ll need to cross-check any alternative referrals against your insurance coverage.
But beyond that, shop around. Compare costs and, while you’re at it, compare reputations by seeking doctor reviews at a site like Healthgrades. Look for the treatment options that match your policy terms, expectations and out of pocket budget while still meeting your personal standards for quality care.
8. Shop Around For Imaging
In addition to shopping around for surgical options, you can do the same with imaging. X-Rays, CT Scans and MRIs actually exist on a broad pricing spectrum. These diagnostic procedures can be extremely costly, but it may depend on where you go.
Like surgery, this is something that can vary significantly depending on the geography. Kiplinger says that “HealthcareBluebook.com shows the price range by zip code for thousands of procedures and the ‘fair price,’ which is a reasonable amount you can expect to pay for the procedure in your area. For example, a knee MRI in Chicago ranges from $650 to $4,200, and Healthcare Bluebook recommends a fair price of $1,183.”
So, if for instance, you are a city dweller, you might be able to save hundreds or even thousands by venturing outside of your own neighborhood for a more affordable option. If you live in a rural area where options are limited, you may benefit by comparison shopping in a more populous town or city in your region. Before you get any type of medical imaging done, call around and find out what the price differentials are from one location to the next. And again, of course, make sure that any alternative provider you choose to visit is still in your coverage network.
9. Change Your Plan If It Doesn’t Work For You
Of all the things you should shop around for, a suitable healthcare policy is tops among them. Don’t waste money by sticking with a healthcare plan that doesn’t make sense for your needs. There are countless permutations for the kind of health policy you could be eligible for, with wide variations in premiums, deductibles, co-pays, prescription coverage, benefits, and more.
If you are paying your own care, you have the option of visiting the health insurance marketplace created by the Affordable Care Act during the annual open enrollment period. Here, you can shop around based on what is available in your state and based on which plan meets your healthcare needs and budget. You may even be able to qualify for government assistance or access to an income-friendly plan. Start with a visit to the healthcare.gov site, where you can begin the enrollment process and learn more about your options.
If you receive your health insurance coverage through an employer, you may not necessarily be able to choose your provider, but you should have access to a variety of care plan options under the umbrella of that provider. If you’re paying too much for your out of pocket expenses, or you’re paying a high premium for a modest set of healthcare needs, you might want to start by comparing your existing insurance plan with other plans available to you on the marketplace. One of the best ways to save money is to ensure that your health insurance policy is smartly tailored to your patterns of usage and your actual needs. Regardless of whether you’re overpaying or underpaying for your upfront premiums, having the wrong plan for your needs will more than likely lead to higher overall costs.
10. Lead a Healthy Lifestyle
There’s obviously a lot that you can’t control about the cost of healthcare. Insurance premiums and the cost of certain procedures are high, which is pretty much in line with the increasing cost of everything in the United States today. But there are things you actually can control and they can not only lead to lower healthcare costs, but you’ll also improve your chances of living a longer life. Bonus, right?
All you have to do is lead a healthy lifestyle. Preventative health care is critical to helping offset more costly long term health challenges. And the most effective preventative healthcare you can employ is through lifestyle modification. Insurance provider Blue Cross Blue Shield advises that there are a number of essential things you can do to lower your health risks including establishing a nutritious diet, exercising regularly, getting sufficient sleep, keeping a healthy weight for your body type, and eliminating bad habits like smoking, excessive alcohol consumption, binge eating, and more.
We’re certainly not suggesting you shouldn’t have a piece of cake on your birthday, or an occasional glass of wine with your dinner. But in the interest of heading off heavy medical expenses before they can occur in the not too distant future, take steps to lead a healthier lifestyle today.
There are other ways to improve your overall health outlook beyond just diet out exercise. In fact, one great way to improve the financial well-being of your household and the health outlook for those living within it is to improve the environmental sustainability of your lifestyle. For some ideas on how to get started, check out these 5 Ways to Save Money and Help the Environment.