Underinsured? 11 ways to stretch health-care dollars
The bad news isn't just that you've got colon cancer.
It's that, while you've got a good chance for long-term survival,
you are underinsured and your checking account may not recover from
your illness, even if you do.
employees assume that because they have health insurance through their employer,
they can weather any medical calamity. The sad truth is that even if you have
health insurance, it probably won't be enough if you face a serious illness or
an accident that requires extensive hospitalization or rehabilitation. In addition,
while it's good news that people are surviving longer due to better treatment
for life-threatening illnesses, their increased longevity comes at the cost of
bigger medical bills.
A Harvard study of bankruptcies in 2001 showed that
roughly one-half were due to medical causes. Of those that filed
for such medically related bankruptcies, 75 percent had insurance
at the onset of illness.
"Medical debtors were 42 percent more likely
than other debtors to experience lapses in coverage," according
to the study. "Even middle-class, insured families often fall
prey to financial catastrophe when sick."
More people are underinsured as companies face increased
costs for providing or supplementing their employees' health coverage.
Medical costs for companies increased by 59 percent in 2000 alone,
and continued to rise by double-digits in subsequent years. General
Motors alone spends close to $6 billion a year on health care for
its employees and retirees.
Businesses can't afford the high rates charged by
insurers, so they're passing at least some of the added costs on
to their employees. They do this by raising deductibles, increasing
the amount of co-pay for each doctor's visit or treatment, and cutting
back on what's covered. "Costs have gone up and employees'
medical benefits have eroded over the years," says Dr. Steve
Neeleman, CEO of HealthEquity Inc., a health-savings account administrator
in Salt Lake City.
For example, Kim Zieglowsky, a labor-and-delivery
nurse at Bozeman Deaconess Hospital, the local hospital for the
city of Bozeman, Mont., was diagnosed with a rare form of bone cancer
and had to seek treatment in Seattle. While she has medical insurance
through her job, Zieglowsky's care will cost several hundred thousand
dollars and she will have to pay a major portion of that. A mother
of five, she can't afford to pay for her own care. Family and friends
recently set up an account at a local bank where people can donate
funds to help her.
Zieglowsky is not alone. A 1995 study published by
the Journal of the American Medical Association estimated that nearly
29 million people in the United States were underinsured, and given
the rise in medical costs since that study was published, the number
of underinsured has likely risen, too. A more-recent study by the
Commonwealth Fund, a nonprofit health-policy research group in New
York, indicates that about 16 million U.S. adults with health insurance
(or 12 percent of the insured population) in 2003 found themselves
under financial duress due to medical bills.
A family can take preventive measures to weather the
financial storm of a serious -- and expensive -- illness. Some to
Set up a health-savings
account. HSAs are a boon, but can
only be set up if you have a high-deductible health plan ($1,000
or more for individuals; $2,000 or higher for families). You contribute
pretax dollars to the account, and funds are withdrawn as needed.
The amount saved is rolled over from year to year. The big problem
is financing an HSA if your family's finances are already stretched
to the limit. Neeleman says that one way to save money is to raise
your deductible and lower your monthly insurance premiums. Then
you can deposit the difference into your HSA.