By: David Murdock, J.R. Prewitt & Associates Life, Health and Group Benefits Consultant
There is no doubt that health insurance is an extraordinarily confusing concept. As a Life, Health and Group Benefits Consultant, I am often asked, “Why am I paying so much for healthcare and still incurring the costs of copays and deductibles?” In short, my answer is medical trend.
What is medical trend?
Medical trend is defined as a change in health care costs. Health insurance companies, like Blue Cross and Blue Shield of Alabama, monitor the costs of visiting a physician, having lab work done (i.e. MRI’s, x-rays, colonoscopies, etc.) and receiving other routine outpatient treatments to determine how they are trending. Other factors that influence medical trend include price inflation, increased usage of medical care and services, leveraging effect of fixed deductibles and copays, cost shifting from the uninsured to private payers, government-mandated benefits and technological advancements.
How did the Affordable Care Act (ACA) impact medical trend?
While ACA caused some positive change, like removing lifetime maximums—the amount a health plan will pay in benefits to an insured individual during his/her lifetime, it prompted medical costs to grow at a faster rate. With lifetime maximums removed, health insurers began facing multi-million-dollar claims. Consequently, to counter those costs, the only health plans they offered required higher deductibles and out-of-pocket maximums, which put the costs back on the consumer.
How do increasing health care costs impact employees?
Employees often associate the cost of healthcare with what comes out of their pockets. They usually don’t think about their share of the premium since it’s a payroll deduction, but expensive co-pays and high deductibles catch their attention and raise complaints.
How do increasing health care costs impact employers?
As the healthcare benefit provider, employers not only incur the costs of outsized healthcare premiums, but they are also confronted with employee complaints and questions. These spur employers to seek a solution that offsets the costs of higher deductibles and out-of-pocket maximums.
What is the solution?
At J.R. Prewitt and Associates, we’re encouraging employers to consider secondary insurance options. The emergence of secondary insurance coverage has helped defray the burdensome out-of-pocket costs to employees. Essentially, secondary insurance kicks in to cover a lot of the costs that would otherwise go to deductible and out of pocket expenses. While secondary insurance may not cover everything, it helps minimize large expenses in many cases. If you’re interested in learning more about secondary insurance, contact me today, and we’ll determine a plan to meet your unique needs.