Three of the Biggest Ways to Save Money on Healthcare

I think this is a good topic to discuss since open enrollment is coming up soon.

I know a lot of people-- probably most people, have stressed at some point about the cost of healthcare. I am not going to go into what makes healthcare so expensive. We could literally sit down today and start debating everything that contributes to prices and unaffordability and still not finish by next week. But I do want to talk about one facet of healthcare that is commonly the most out-of-pocket expense each year. And this is true even if we are productive, healthy people. That facet is health insurance, and I believe changing how we perceive healthcare insurance in the United States can save us money.

But first, here are three rules to health insurance that my husband and I pretty much live by, and a fourth that is not always available but should be seriously considered by those who have the option. Here is the list for those who want the highlights first because this will be a long post.

1. We don’t pay for insurance we don’t need. This includes higher premiums for higher levels of coverage and/or double coverage.

2. We take the highest level deductible we can.

3. We don’t go to the doctor when we don’t need to.

4. This is a bonus, but not always available to everyone: we utilize an HSA if available.

Now, to explain why those rules above matter to us, I think I need to explain our perspective on health insurance in the U.S. So let's go back in history a bit. Or maybe a lot. Literally, since the dawn of mankind, up until the early 1900’s, health insurance was not “a thing”. The way most people received health care was at home. They took care of the problems themselves and handed down their first aid and cold and flu remedies to others in their households. If there was a medical problem they could not handle at home, they might be lucky to see a local medicine man or healer. Later in history as medicine began to be studied scientifically, they could see a doctor, if they could afford it.

Going into the 19th and 20th centuries, medical research began to grow immensely, and more and more treatments were discovered. Options were becoming available. Even conditions previously considered death sentences were now being easily cured with surgeries, antibiotics, etc. However, the same old issue sprang up of affordability for more advanced care. More complicated treatments and surgeries also meant more cost. It was fine if you had a lot of money or at least a decent amount, but not if you were poor. In the early part of the 1900s, hospitals and physicians really led the way in being the first to offer prepaid plans to their facilities for a handful of dollars a year. This then made the more expensive options of healthcare affordable to almost anyone.

Still, I’d say up until the 1980’s to early 1990’s most people knew how to treat minor issues such as colds, flus, and small injuries at home. Nor were traditional forms of medicine such as herbal remedies a foreign concept back then, even to physicians. I even remember as a kid, my family doctor prescribing mint and chamomile tea for my stomach issues. He almost alway recommended a home remedy treatment regime first, which usually cost us little to nothing. Then only if that didn't work would he be willing to prescribe medications. But generally, the home treatment did work.

Another aspect of U.S. health insurance is that it is not a health program like in the U.K. or Canada. It literally is insurance and was not designed to cover the total cost of care. And, if you've ever dealt with other types of insurance, like vehicle insurance, you know that it won't cover general maintenance, and even with big repair expenses, you will still have to pay something yourself. The same is true of medical insurance.

Really, it has two fundamental purposes. We may get discounts or some other perks with insurance these days, but these two main purposes haven't changed. They are 1) to give access to higher-cost areas of medicine previously out of reach of those with lower incomes and 2) to help keep someone from going bankrupt over medical costs in the event of a catastrophic medical event. Many people may want a socialized healthcare plan. I could argue many reasons why I am not in favor, but I do think a competitive government plan option might help drive other insurance to be more affordable. Anyways, I digress. The likelihood of an overhaul of the healthcare system in our country happening anytime soon is unlikely. So, we need to work with the one we have now.

So, rule #1, “We don’t pay for insurance we don’t need. This includes higher premiums for higher levels of coverage and/or double coverage we don’t need.” Health insurance is “Insurance”. My husband is over 50 and I am over 40. We both have medical issues, but neither of us has very complicated issues. I go to the doctor once, maybe twice a year at the most and usually for a prescription refill. That’s it. My husband goes maybe once or twice more than me, mostly for medication adjustment for his blood pressure. We would never get the value out of a high premium insurance. It would literally be hundreds of dollars more out of our pocket each month that we couldn’t recover. And, to get to the point that the insurance company paid 100% we would have to meet our yearly deductible which, for us, a high-premium insurance is still about $1,500/year per person.

I wouldn’t even spend $1,000 out of pocket for expenses if I paid it all myself. The insurance companies would be happy, but we would not benefit. The only people who would likely benefit from a high premium, low deductible insurance are people who require frequent repeat trips to the doctor and/or other treatment centers. For instance, people on dialysis, people receiving cancer treatments, people with complicated diabetes, etc. Even those with several kids who are prone to the daredevil lifestyle. I can think of at least one family of boys, when I was growing up, who were in the ER about every month for a broken bone from their various shenanigans. It’s important that we each evaluate the needs of our individual families and adjust our insurances accordingly.

This leads us to rule #2. “We take the highest deductible we can.” Since my husband and I pretty much only require insurance in the case of a significant emergency, our deductible is about $7,000 per person/per year. This might make some of you want to stop reading right now, but you need to understand a few things that we do since we have both been in healthcare our entire careers.

First off, this cost would only come up in a true emergency or significant health event. Which for my husband and I has only happened once to each of us in our lifetimes. Second, $7,000 is not going to bankrupt most people. If it did, that person would likely qualify for Medicaid anyway and this discussion would be moot. Also consider that most medical facilities are willing to set up payment plans rather than get nothing.

Ideally, a person would set up a savings account for an emergency fund that would at least cover a deductible. That might take some time, but is a worthwhile endeavor. And never be afraid to take advantage of resources facilities may provide like consultations with social services representatives. These people are very knowledgeable about the system, and options patients and their families may have.

A third option is hospital indemnity insurance. Sometimes, you can get this for very little fee added to your regular insurance and it would pay a lump sum of money to you in case of hospitalizations. You could use that money for anything you needed during that time, like paying rent, bills, or your deductible.

Now, rule #3. “We don’t go to the doctor when we don’t need to.” This rule also applies to going to the ER, as well. This may, for many people, require them to become quite a bit more self-educated in learning to identify what constitutes a needed trip to the doctor or hospital and what doesn’t. The reason I have this rule is that it is generally about $140 dollars out of pocket even with insurance per physician visit, and if it’s non-emergent, many thousands of dollars per ER visit. This is still money out of my pocket that I didn’t need to spend, and I can’t get back.

I know a lot of people who go to the doctor many more times a year than they need to. I couldn’t begin to describe to you the huge proportion of emergency services in our country that are taken up by trivial concerns that do not require a medical professional to intervene. It is a real drain on our hospital resources across the country and has been for a long time and a topic for another time.

I think, when it comes to this issue, we need to take a longer view and consider the true costs. For instance, If we go to a hospital around here (The Seattle area) because we have a non-emergent illness, we will likely be out of work all day sitting in the waiting room full of other sick people because we will not be triaged as a high priority. If we weren’t that sick before, we might be now, by running the risk of picking up other illnesses from that crowded waiting room and then being out of work longer.

So, what are some solutions? Consider virtual care if you really feel the need to consult a nurse or doctor. It still may cost something, but it’s often less costly than an in-person visit. Also, if it doesn’t seem emergent, but is concerning consider just calling the doctor’s office for an opinion or sending a message via an online patient chart if you have access set up. I have, more than once called or sent an online message and it cost me nothing.

Also, urgent care centers are a great option when we need a doctor, and it’s an issue that can’t wait very long, but it’s not life-threatening. Even some hospitals and clinic centers have added them to their facilities because they understand we now live in a time where we can’t just pop in to see our family doctor anymore. There are even some urgent cares that provide x-ray and other imaging services, and they are a far less expensive option than going to the ER.

The truth is, that health- insurance is an unavoidable necessity if we want to avoid the risk of medical bankruptcy. Therefore, I don’t advocate going without it. Because of this, this article reiterates how three of the biggest ways to save on medical costs have to do with health insurance. And here are the points to remember.

1. Don’t pay for more insurance than needed.

2. Take the highest deductible you are able to.

3. Don’t go to the doctor or hospital unnecessarily.

Also to remember, health insurance provides access to higher levels of more costly care and helps prevent medical bankruptcy, but it is not a social health program like in other countries.

But here are a couple more tips, just before I sign off now.

1) My husband and I make sure our plan has no cap on benefits. This means, if you look at some insurance plans, they will say that they will only pay a maximum of say one million in expenses per year. Now, it’s unlikely that either of us would ever need that much, but I have seen many patients end up in the ICU in the hospital for over a month and need further treatment after. They more than met that maximum benefit cap. However, making sure there is no cap, also makes it so we do not need to buy extra/double coverage.

2) We utilize an HSA whenever it is available. For us, it usually is because they are only available for high-deductible plans. However, you’ll have to meet certain requirements to be eligible for one, but they are worth looking into. Not only does it lower our overall tax liability, but it allows us to keep more of our money and have more options. For example, we didn’t need to wait for insurance approval when my husband needed to start physical therapy. We were able to use the HSA funds until insurance approved. We can also use the funds in HSA to pay towards our deductible, which we often do. I will talk more about HSAs in the future, but they are good options to help offset insurance and other medical costs.

And lastly, here is a good informative resource from the Centers for Medicare and Medicaid Services explaining health insurance. It is a downloadable free resource.

Glossary of Health Coverage and Medical Terms

And here is a good link by UC Davis on when to go to the ER, Urgent Care, or Doctor.

Should you go to the emergency room (ER), urgent care or doctor’s office?

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Disclaimer: This article may contain affiliate links. This article is formed from personal experience and opinions of the writer(s). No information in this article may be taken as a substitute for personalized advice from an appropriately licensed healthcare professional.