Source: Fidelity Investments Six Annual New Year Financial Resolutions Study, December 2014

Health care costs are putting Americans’ financial well-being at-risk, according to Cigna’s survey of U.S. consumers’ attitudes about health and finance.[i] The health plan polled over 1,800 U.S. adults in August 2014 and found that most people feel increasing health care costs will have a major impact on their financial well-being and ability to fund their kids’ college education and their own secure retirement. In fact, medical care cost increases between 2000 and 2012 are a key component of “the middle-class squeeze,” according to a report published in September 2014 by the Center for American Progress.[ii]

Financial worries are the number one cause of stress, responsible for up to 75 percent of doctors’ visits.[iii] Problems with finances are among the top 3 most common experiences that contribute to stress among people with “a great deal of stress.” [iv]

Common Contributors to Stress

Top of mind for 3 in 4 people is that health care costs could ruin one’s prospects for a secure financial retirement, and two-thirds of people worry that health care costs could financially ruin them.

Financial health is part of overall health

There are good reasons for people to worry about health care costs. The Employee Benefits Research Institute found that nearly half of workers were confident about their ability to get the treatments they need today, but only 30% were confident about that ability during the next 10 years, and just 19% are confident once they are eligible for Medicare. EBRI estimates that average out-of-pocket health care expenses a 65-year-old male will run $246,000 if he is in poor health and dies at 81. If that 65-year-old man is healthy, his health costs increase to $345,000 if he survives to 87. In fact, Less than one in six people of pre-retirement age has ever tried to estimate how much money they might need for health care and long-term care in retirement,” according to Merrill Lynch and Age Wave.[v]

People define health and wellness across many dimensions: physical health, mental and emotional health, physical appearance, and finally, financial health, and social connections with other rank in the top five contributors to overall health.[vi]

There is growing evidence that financial stress contributes to ill-health.[vii] Job insecurity can also lead to a higher risk for adult-onset asthma, found in a European study published in September 2014 in the Journal of Epidemiology & Community Health researching 7,000 working adults in Germany. The study found that for every 25 percent jump in job-related stress, the risk for asthma also increased by 24 percent, and rose to 60 percent among those who thought it was highly likely they would lose their job. “Our findings may also provide a possible explanation for the increased prevalence of respiratory symptoms during the recent economic crisis,” the authors wrote in a press release.[viii]

“It’s time to get mad about the outrageous cost of healthcare,” Consumer Reports advised readers in a September 2014 article. The piece pointed out four key reasons for the suggested outrage: even with health insurance, many patients aren’t covered for high-cost procedures or out-of-network services; high costs lead to high health insurance costs; workers have traded off wage increases for holding on to health care insurance at the workplace; and, Americans have relatively lower outcomes than other developed countries who spend far less per person on health care.

The Anger Index

Consumer Reports asked U.S. adults what they thought of the high costs of health care in America. Results from this survey informed “The Anger Index,” shown in the exhibit, with the vast majority of Americans saying $37.50 for a Tylenol pill in the hospital is “outrageous,” 89% of people outraged by doctors ordering MRI exams because they own the machine, and 80% outraged by a $1,000 price tag for Sovaldi, a Hepatitis C drug.

Even with the launch of the Affordable Care Act and over 9.3 million people added to the health insurance rolls,[ix] the burden of medical debt in America is growing based on NerdWallet’s calculations. Medical debt is the largest single category of consumer debt in collections, with 1 in 5 U.S. adults being contacted by a debt collection agency about medical debt in 2014. NerdWallet found that medical debt is the largest driver of personal bankruptcy, leading to nearly 60% of all personal bankruptcies in the U.S. While households lost $2,300 in median income between 2010 and 2013, their healthcare expenses increased by $1,814 in the period.[x]

The upside: saving and health improvement go hand-in-hand

It turns out that poor physical and financial health are driven by the same factors. But that’s also good news: because it means you can think about making choices that foster both financial and physical health at the same time. People who save for the future by contributing to a 401(k) plan were able to improve negative health test results and change poor health behaviors 27 percent more than people who did not contribute to a retirement plan. In their paper, “Healthy, Wealthy, and Wise: Retirement Planning Predicts Employee Health Improvements,” researchers found that employees who took income and put it into a 401(k) retirement plan were more likely to respond to negative health problems revealed through a blood test.[xi] The bottom-line: people who had previously decided to save for their future via 401(k) contributions significantly improved their health more than non-contributors.

How to take control of financial/health life

There are many actions you can take to manage financial wellness. Here are some of the most important decisions you can make to be in greater control of your health-wealth.

Right-size your use of health services. Health care use in the U.S. tends to be “super-sized,” overused by too many people. Dr. Otis Brawley, chief medical officer of the American Cancer Society, has referred to overtreatment as “medical gluttony.”[xii] There are many reasons people are over-treated, including duplication of services already performed, providers’ lack of access to results of previously- performed tests, and providers’ concerns about liability. Shannon Brownlee’s book, Overtreated had the tagline: “Why Too Much Medicine is Making Us Sicker and Poorer.” Health consumers, now with greater financial skin-in-the-game, should be mindful of the overtreatment trend by asking several questions when a provider is recommending a medical test, a procedure, or prescribing a new medication. The ABIM Foundation, authors of the patient-decision making project Choosing Wisely, recommends that people ask five questions:

  1. What are my options?
  2. What are the risks and benefits of each option?
  3. What happens if we wait or do nothing?
  4. What does this test measure?
  5. Who will contact me about the results and what happens if they are abnormal?

Shop around: take advantage of growing transparency in health care

The price of health care services in the same community can significantly vary.[xiii] There can be a two-to-three fold difference in the cost of a procedure in the same town depending on the provider and what kind of insurance a patient has. NerdWallet discovered that for the same inpatient treatment, one hospital can charge more than 50 times as much as another hospital in the same community. As consumers increasingly have to deal with high-deductible health plans and health savings accounts, it’s not uncommon to get health care “sticker shock” after receiving a treatment or filling a prescription. A TransUnion Healthcare survey of insured consumers found that two-thirds of Americans report being surprised by their medical bills.[xiv] This could be due to the fact that, according the survey, only 25% of patients are being offered pre-treatment cost estimates from their providers. The upside: 73% of adults say if they knew the cost of medical care before receiving a treatment, they could make better health decisions. Shopping around can make a real difference in the price you pay for health care. For example, patients who had MRI scans and were informed of price differences among available facilities and given the option of selecting from different providers chose lower-cost providers, and also triggered local competition among the providers.[xv]

Think “retail” when you consider your health service options

“Where” health care happens is increasingly happening outside of hospitals and doctors’ offices. Consider using these growing retail health sites which are generally lower-cost locations to get health care. Pharmacies are expanding their health care service offerings, going “beyond the pill” at the back of the store to offering immunizations and medication management programs.

Convienent Care Is Cost-Effective Care

Walmart, which has operated urgent care clinics staffed by nurse practitioners for many years, recently launched primary care clinics managed by physicians: visits cost $40 for patients (and $4 per visit for Walmart employees).

Take your medicine as prescribed

Medications are the second biggest medical cost concern people have, Cigna’s survey found, second only to worrying about the cost of hospitalization.[xvi] Thus, 90% of people use lower cost prescription choices when they can. That’s a great tactic for managing the medication portion of your health expenses. But some people avoid filling prescriptions that their doctors write for them, or postpone taking prescribed medications meant to manage chronic conditions. This may be clever short-term thinking, but in the longer run, these decisions to skip medicines can lead to ill health and, ultimately, higher health costs. That’s because sticking to medication instructions can help you avoid unnecessary visits to the emergency room, or a chronic medical condition worsening to a later stage requiring more aggressive interventions such as surgical procedures, medical device implants, or more frequent visits to medical specialists. So medication adherence – the term that means taking your medicine as prescribed by your health care provider – can actually help you save money in the long-run.

Take advantage of a health spending account (HSA)

An HSA is a valuable employee benefit: the account allows workers who put money into it a tax-advantaged tool for medical care spending. But while health plans with HSAs have been offered for more than 10 years, the Employee Benefits Research Institute discovered that millions of people eligible to open HSAs under their health plan hadn’t yet done so. Only one-half of employees with HSAs contributed to them in 2013. Of those HSAs that received worker contributions, only 5% received the maximum $6,450 allowable contribution. Thus, millions of workers who could have gained from using this health savings tool did not, and if they did, many didn’t do so to full advantage.

Check out benefits and discounts from memberships

Clubs, alumni associations, store clubs (such as Costco and Sam’s Club), and memberships like AARP and AAA offer various discounts for health and wellness. You might find very good prices and programs for health insurance, prescription drugs, retail health services, and over-the-counter drugs through these membership benefits. Take a moment to read the fine print of your benefits newsletters or organizations’ websites. Doing could be worth your time, and save you money with those few minutes invested.

Use apps and online tools to get smart and manage health finances

There are several kinds of personal health technologies people can use to manage health – some manage clinical issues, like tracking numbers such as blood pressure and blood glucose; some track daily living observations like activity (steps taken), food eaten (calories consumed), and calories burned; and a growing list of apps and websites help manage health finances, to compare the costs and quality of services and to keep track of money spent in health savings accounts, for example. Cigna’s survey found that consumers are indeed open to using apps in health care. There are many online and mobile tools to help you manage health finance, including, among others:

  • GoodRx, a prescription drug shopping tool that allows consumers to research a drug by name, identify whether a generic equivalent exists, and then find the lowest cost in their geographic area to purchase the drug from both community pharmacies and mail order services.
  • Healthcare Blue Book, which publishes cost information on visits, procedures, and medications, and calculates a “fair price” based on data analysis. This tool is available online and through iOS and Android apps.
  • HealthSparq, offered through employers, provides an online portal to help consumers comparison-shop for healthcare services, for people enrolled in one of the 60 health plans participating in the service.
  • UnitedHealthcare, the health plan, developed myUHC to help consumers manage health savings accounts and high-deductible health plans, calculating out-of-pocket prices for users based on insurance information and local providers.
  • PokitDok enables consumers to shop for health services and offer a price they’re willing to pay for that service. Health providers (physicians, dentists, chiropractors, and others) agree to provide a medical service to the consumer for that quoted price.
  • HealthinReach provides a website to help patients shop for medical and dental procedures online and then book appointments.

 

Change the way you think about spending on health

Four in five people told Cigna they “wish doing healthier things didn’t cost so much.” But “doing healthy things” doesn’t always cost a lot of money. Consider that health can drive personal savings and productivity. As the Cigna survey uncovered, most people feel their physical health affects their financial security. So take advantage of this Catch-22: remember that preventing disease and bolstering wellness can build personal vitality and resilience. That way, when you do receive a diagnosis – which, inevitably, most of us will — you’ll enter the battle in fighting shape, both physically and financially.

It’s a matter of paying now vs. paying later. What may seem to be an expensive preventive measure today could prevent a much more expensive surgery tomorrow, next month, or next year.

Become a value-based health care shopper. The new-new thing in health benefits is “value-based benefits.”[xvii] Since the advent of the 2008 Recession, consumers have learned how to shop for value in retail stores: purchasing store brands, taking on do-it-yourself tasks, and cooking more at home instead of eating in chain restaurants.

In seeking value in health care, shopping means more than comparing costs: value in health care takes into account quality, both clinical outcomes and in patient experience. That “patient” would be “you,” and as health costs continue to climb, they are “your” health costs. Welcome to your new world as a health care consumer. May financial wellness be yours.


[i] Cigna. Health & Financial Well-Being: How Strong is the Link? October 2014

[ii] Center for American Progress. The Middle-Class Squeeze – a picture of stagnant incomes, rising costs, and what we can do to strengthen America’s middle class. September 2014

[iii] Kalish BM. The integration of finances into wellness programs. Employee Benefit Adviser, November 19, 2013

[iv] NPR, Robert Wood Johnson Foundation, and Harvard School of Public Health. The Burden of Stress in America, July 7, 2014

[v] Merrill Lynch and Age Wave. Health and Retirement: Planning for the Great Unknown. September 2014

[vi] Edelman. Health Engagement Barometer: Health Influence in the Era of Public Engagement, 2008

[vii] Soong J. The Debt-Stress Connection. WebMD, 2008

[viii] Loerbroks A, Bosch JA, Donwes J, Angerer P. Job insecurity is associated with adult asthma in Germany during Europe’s recent economic crisis: a prospective cohort study. Journal of Epidemiology and Community Health 2014 Sep 22. pii: jech-2014-204274

[ix] RAND. Changes in Health Insurance Enrollment Since 2013: Evidence from the RAND Health Reform Opinion Study. 2014. Accessed at: http://www.rand.org/blog/2014/04/survey-estimates-net-gain-of-9-3-million-american-adults.html

[x] LaMontagne C. NerdWallet Health Study: Medical Debt Crisis Worsening Despite Policy Advances. October 8, 2014

[xi] Gubler T, Pierce L. Health, Wealthy, and Wise: Retirement Planning Predicts Employee Health Improvements. Psychological Science 2014 Sep;25(9):1822-30

[xii] Brawley OW. How We Do Harm. New York, NY: St. Martin’s Griffin Press, 2012

[xiii] The Commonwealth Fund. Rising to the Challenge: Results from a Scorecard on Local Health System Performance, 2012

[xiv] TransUnion. New findings on consumers’ views of billing experiences and what they mean for you, 2014

[xv] Wu S, Sylwestrzak G, Shah C, DeVries A. Price Transparency For MRIs Increased Use of Less Costly Providers And Triggered Provider Competition. Health Affairs 33. 8(2014): 1391-1398

[xvi] Cigna, ibid.

[xvii] Towers Watson/NBGH. Employer Survey on Purchasing Value in Health Care – The New Health Care Imperative: Driving Performance, Connecting to Value