Tuesday, November 27, 2007

Health Care and Insurance

Most Americans get their insurance through their employer. As a result, health insurance is available to the vast almost every household. There are currently over 250 million insured in the U.S. according to numerous organizations that track statistics of uninsured versus insured. Since 2000, the cost of insurance has risen faster than wages and the cost of insurance has increasingly been shifted to the employer. The current expectation is that the cost of insurance will continue to increase over time at about 6% to 8% according to MedicalNewsToday.com this month. These rates are not as bad as the double digit increases seen five years ago, but are still twice the rate of inflation.

Employees are getting more nervous as employers continue to cut benefits and increase premiums. Cost shifting has become more the norm as insurance companies seek ways to recoup more profits and pass those costs on to employers. Small businesses are having more and more difficulty maintaining benefits for employees, and most small companies are forcing employees to pick up the cost of their health plan as a result. The other option is to cut benefits for employees altogether and hope that they can either find their own insurance or take the risk of not getting sick or have an accident. The cost of processing claims should be going down as we see more companies use electronic filing and record keeping.

Unfortunately, as the American population ages with the first waive of Baby Boomers now starting to turn 60, there are more claims being filed; and the cost of health care continues to increase every year. Americans are living longer and are putting a strain on the health care system as they age. Even those seniors who continue to work past the age of retirement are concerned about how they are going to pay for their insurance until Medicare kicks in. With limited income or restricted access to health care options, many people will postpone necessary medical needs simply due to lack of available funds.

Surveys have shown that one of the leading components of personal bankruptcies over the past few years has been unpaid medical bills. Often, when employees have significant medical needs, their insurance may only pay a portion of the total bill which leaves a large amount due to the medical provider or hospital. Typically, as in any other creditor situation, the billing entity will pursue the payor for the balance. If the issue cannot be resolved favorably, the employee will be sued for what he/she owes. If the illness or accident that caused the medical problem led to long term absence from the job, the employee is most likely terminated. This problem leads to a bigger issue as the employee in most cases no longer has insurance coverage, and there is no income to offset living expenses and payment of outstanding debts.

Most of us complain about our insurance--it's too expensive; it doesn't pay enough; the insurance company takes forever to pay the medical bill, etc. All these complaints may be legitimate gripes. But the alternative is not something that most Americans really want. People want to know that if they have a medical need, that they have a way to help offset the costs. Insurance can be a great asset, but it can also be a problem if the insured has no idea what benefits they have. That's primarily due to the fact that insurance has a stigma attached to it. The explanation of benefits is a challenge for the insured to understand the complex language written in most policies.

As a licensed insurance agent in all 50 states and the District of Columbia, I have talked with many people over the past 9 years who have no clue what their insurance is or how it works. All they know is that they pay alot for it, and sometimes it works and sometimes it doesn't. Insurance companies like to reap huge profits from premiums and investments, and most of them talk about how many lives they insure. They are proud of their ratings from Weiss and other rating companies that promote how great the insurance companies are in all categories including customer care, assets under management, regulatory compliance, and more. But the honest truth is that insurance is expensive. It's expensive to have, and expensive to keep.

When the choice is made by employers to drop benefits or force employees to pay more money from their paycheck for less coverage, or worse--drop coverage completely as an available benefit--the American worker needs to get smart. There is no incentive to shop insurance plans if somebody else is paying for it. Go to your HR Director and talk with them about considering various options. Search the internet and find plan information about products that work for you. Do some research and compare plans. Take the initiative to find a way to help offset catastrophic medical bills so bankruptcy is not an option. If you don't look out for your health care, no one else will.

Until next time. Let me know what you think.

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