Hixme Think

The Cost of Healthcare

Amir PirniaAmir Pirnia

The cost of healthcare in America is outrageous. We spend about $3.4 TRILLION every year. No, that’s not a typo. A trillion dollars is a difficult amount of money to imagine, so here’s an illustration:

If the American healthcare industry were a country, it would be the fifth largest economy in the world. Warren Buffett says that healthcare is the biggest problem America and U.S. businesses face, comparing it to a tapeworm eating away at the economy. His remarks were made after the passage of the Affordable Care Act, which he said was not enough to fix the problem.

Then there’s the question of who should pay for healthcare – depending on your politics, you may have a different answer: government? Your employer? Yourself? However, in each scenario, the same root problem remains: Americans are paying too much, too frequently for bad results and often that high cost insurance is related to things that are more lifestyle based than health based. While these services may be important policy issues, they are rarely “good insurance”. Why should we be surprised at the accelerating costs?

Some estimate that about one third of the cost of health care is considered a waste – on procedures, tests and gadgets that don’t do us any good, and in some cases, do the opposite. Some reports say half of the cost of the U.S. defined healthcare industry may be a waste, especially if we compared to other countries who count healthcare as care for diseases and accidents only. How can $1.7 trillion dollars be a waste!? That’s nearly double our annual defense budget. It’s a ridiculous amount to spend for questionable results and it’s hardly how any other American industry works.

Meanwhile, we know that even core healthcare costs are out of control. We’ve been told the problem is pharmaceuticals, due to a few recent infamous examples. But if we pay attention, and do a little research, we discover in addition to drugs, fees for procedures, hospital charges, diagnostic tests and devices range from three to ten times the amount of other medically advanced countries. We know that these prices are never upfront “advertised” prices. Unlike any other industry, healthcare fees have little basis in the actual underlying costs. It becomes evident when you’re charged $53 for non-sterile gloves (sterile cost more), for a total of $5,141 during an average hospital stay. Or $23 per alcohol swab, for a total of $322 during an average stay.

So what the heck is going on here? Imagine going to a coffee shop for a cup of coffee. You ask what you owe for the coffee and the barista tells you not to worry, you’ll be billed. You get your bill and the cup of coffee cost $20. No worries though, insurance paid $15, and you only have to pay $5. So you accept the disproportionate cost because you don’t have to take responsibility at the moment. Compare that analogy to health insurance which covers various “incidental” services, procedures and devices and it’s no wonder the costs keep going up. Insurance was never meant to cover these sorts of things. It was meant to protect us from the risk of major medical expenses.

“No worries… Insurance will cover it.”

We have also accepted that overpriced health insurance should share the cost of a whole array of very routine, everyday services like regular visits to a doctor or a generic antibiotic. Both of these can be shopped and secured often for much less with cash. Little did we know just how much this kind of coverage would contribute to run-away health insurance over the last 25 years. Or that more lifestyle services like marriage counseling, family planing and other wellbeing services, should be treated similarly. While essential for good health with the idea that people will have fewer illnesses, these services still drive up costs. If we allowed homeowners an insurance claim for replacement light bulbs and the electric bill or a car insurance claim for car washes and tire rotations — we know what would happen to those insurance rates! Only in America, and only related to health insurance has there been such confusion between good personal responsibility and actual insurability.

In other industries competitive pricing is a huge factor in controlling cost. But with little visibility or advertised prices, true competition is not possible in the health care arena. Insurance is being overused for the small, common, negotiable stuff instead of the big, unexpected emergency situations most people cannot possibly pay for. The result? Affordable insurance becomes unaffordable. And when it’s all said and done, all that extra cost gets passed onto consumers.

What is the solution to this excessive inflation? Less government mandates and more consumer choice, creating better and smarter consumers. We wouldn’t buy a $20 cup of coffee, because we know we can get it for $2 around the corner. Part of being better consumers is buying “insurance coverage” when coverage is targeting high cost, unexpected diseases and injuries. Being a better consumer also means buying routine medical services directly, appropriately. If you’re a relatively healthy individual, why choose a platinum level “insurance” when it’s very unlikely you will need that kind of coverage. Especially if there are options that will appropriately cover you in the surprisingly rare case something really big and bad does happen. Your savings with more catastrophic levels of insurance coverage will easily empower you to shop and negotiate for all of your routine care with cash and likely still be better off.

Hixme offers a solution. Hixme believes in empowering consumers with good, affordable and appropriate coverage that is as diverse as the people of America. Our Hixme Bundles are far more than just health insurance. They enable people to spend less per month on over-engineered and over priced health insurance coverage premiums, and still remain appropriately covered with other Bundle features that address expensive and unplanned occurrences. So saving on premiums is just the beginning. That puts real cash in your pocket and power into your choices while providing an incomparably strong safety net.

Exercising your power of choice is being a smarter consumer. Hixme is here now, and will continue to innovate, create new options and push for a more common sense health care system, but it all starts with you.