If there’s something that people can agree on these days, it’s that healthcare costs are too high. Out of the Americans who lose sleep over financial issues, 22% of them cite healthcare costs as the main reason.
Most medical issues are unexpected. You’re shocked to learn that your insurance company pays for a small fraction of the medical bills.
Calculating healthcare costs is a complex web of terms and coverage plans. What does it take to figure out healthcare costs for your average consumers in the U.S.?
Read on to learn how to figure out the average healthcare costs for consumers and how you can determine the factors that make up your personal healthcare costs.
Average Healthcare Costs for Consumers
What do you think the average healthcare cost per person is in the United States? If you guessed more than $10,000 a year, you are correct. The U.S. spent $10,966 per person in 2019.
How does that compare with other nations? Well, the United States is by far the leader in healthcare costs per person.
Compared to other nations with similar median incomes and GDP, the U.S. spends more than twice as much as other countries.
That might leave you wondering why healthcare costs are so much in the U.S. compared to other countries. There isn’t a simple answer, but there are some factors that experts point to that contribute to higher costs.
The first is that the healthcare industry relies on a lot of paperwork to function. Proponents of the healthcare system tout the freedom of choice because there are so many plans and providers available.
That level of freedom costs a pretty penny because of the administrative costs to maintain those systems. Each plan and insurance company has its own set of rules, deadlines, and billing procedures.
It costs healthcare providers more money to keep up with billing and coding. Those costs get passed on to insurance companies.
Doctors and nurses do get paid more in the U.S. than in other countries. It’s hard to compare salaries because the United States has a high cost of living. Another point is that doctors and nurses trained in other countries don’t graduate with hundreds of thousands of dollars in debt.
Finally, the healthcare industry here is a for-profit industry. Insurance companies get listed on the stock market, and hospitals are primary profit centers for medical companies.
Types of Health Insurance Plans
Now that you got the 30,000-foot view of the healthcare industry and healthcare costs for consumers, you probably want to know how to determine your own healthcare costs.
Let’s start with the types of insurance plans. You can get healthcare insurance through private insurance companies or through government programs like Medicare or Medicaid.
Medicare is health insurance for people with disabilities or over 65. Medicaid is a low-income program provided by the federal government and state health agencies.
You can usually sign up for private insurance through your employer. If you’re self-employed or can’t get coverage through your employer, then you’d sign up for health care coverage through the healthcare marketplace.
The healthcare marketplace started as part of the Affordable Care Act. People could get access to affordable health insurance plans through tax credits.
The tax credits get applied to your premiums, which lower the cost of your monthly payment.
Among private insurance plans, there are HMOs, PPOs, and EPOs. These plans decide which doctors to use and when you can see specialists.
For instance, a PPO plan incentivizes you to use doctors in-network by making them cost less. You pay more if you see doctors out of network.
HMOs usually don’t cover out-of-network practitioners at all. If you see an out-of-network doctor, you’re likely stuck with the costs.
How to Determine Your Healthcare Costs
The fine print of your healthcare plan contributes to your healthcare costs. You’re probably aware of the premium, which is how much health insurance costs each month.
There is a co-pay. That’s how much you pay anytime you visit a doctor. Your plan might have a co-pay of $10 for primary physicians and $20 for specialists.
Depending on your plan, there are other tiers for in-network and out-of-network providers.
The deductible is the amount that you pay for healthcare costs before your insurance provider contributes towards their expenses.
This is where most consumers make a big mistake in choosing their health insurance plans. They only look at the monthly premium costs, so they go with a plan that has a lower monthly cost.
What they don’t know is that the deductible is usually very high. You could end up paying thousands of dollars out of pocket to cover the deductible.
You should also check your plan’s prescription benefits. There are variations in each plan as to what’s covered and what’s not.
When you choose your plan, think about how often you go to the doctor, and if you have chronic issues that need medication.
How to Handle Denied Claims
The reason why so many consumers lose sleep over healthcare costs is because of denied claims. A denied claim means that you’re responsible for the entire cost of healthcare.
If you find yourself in this situation, see what the appeals process is for your insurance company.
You might get rejected for coverage for Medicaid because it’s incredibly complicated. In that case, look for attorneys for Medicaid. They can assist you with your coverage questions.
Managing High Healthcare Costs
Healthcare costs should be a concern for everyone. Rising healthcare costs show no sign of coming down anytime soon.
The only thing you can do is understand how health insurance works. That’s how you choose the right healthcare plan and bring your own costs under control.
Now that you know how health insurance works, you’re going to want to take better care of yourself. Visit the Health section of this site for tips to live a healthier life.