Insurance and Financial Services. Your Financial Security Matters!

You may have read articles in the newspapers about increasing health care costs. The articles speculate

 that as health care costs climb for insurance companies, the costs may be passed on to employers and

 eventually to employees.
Rising health care costs is a nationwide problem - with experts agreeing there are no easy fixes. But,

 why are health care costs spiraling out of control? Some of the ongoing and more recent reasons for

 escalating health care costs include:

Because health insurance plans pay for a large portion of most health care costs, we as consumers

 are less aware of what health care services actually cost. We are not "value shoppers." For instance,

if we were going to purchase a 42" TV, we might call or shop around at several different stores or even

check the Internet.

Health care services are different. When we need a medical procedure, we don't call to see which

 hospital has the lowest fee. Even if we were inclined to do so, we may not receive an answer as

 the level of services would be unknown. Because there is normally a third party (the insurance

 company) paying at least a portion of the bill, physicians don't normally "compete" monetarily

for business and the insured cannot or does not often shop around for the best rates for care.

New diagnostic testing and surgical procedures contribute to the increase in health care costs.

The cost of prescription drugs has more than doubled since 1992. Many pharmacy benefit

managers are predicting a 16 to 20 percent increase per year for the next few years in the

 cost of prescription drugs. Reasons for the increases include:

• The introduction of new and costly drugs
• An aging population requiring more medications
• Increased insurance coverage for medication
• Co-payments that are not increasing fast enough to keep pace with the increase in overall costs
• New uses for existing drugs
• Increased marketing directly to consumers

Services needed to treat a person after an accident; trauma or violence can be very expensive

 and are often needed long-term.

In 1998, an estimated 44 million people had no health insurance. Yet, people with little or no

health insurance still need health care. Often, they may not receive care until they are acutely

ill. In addition, the medical care they receive may be in more expensive settings such as emergency

rooms. Hospitals pass these costs on to all of us in terms of higher costs for medical services.

As we get older, we have more chronic conditions such as high blood pressure, arthritis,

 diabetes, heart disease, etc. The cost for treating these conditions also increases through

 prescription drugs, diagnostic testing, surgeries and doctors' visits.

Medical advances, such as transplants, complex operations, premature baby care and life

support machines, have saved and prolonged life. While life-saving, the new technology

and drugs are costly.

An estimated 10 percent of health insurance expenditures are the result of fraud and abuse.

 Providers can be involved in such things as billing for services not given or incorrect coding

to get paid for services not normally covered by insurance. Insured's can also be involved in

 fraud and abuse through submitting altered or false bills for services or by having more than

 one insurance company and not disclosing this, thus receiving duplicate payment for services.

The reasons outlined above influence the cost of health care services. Cost saving measures,

such as pre-certification and credentialing requirements, ensure quality of care while controlling

the increase in the overall cost of health care.