This is a comment members ask Western Grocers Trust frequently as you can imagine. One reason the Trust was created was to control costs for our members and smooth out rate increases.
Towards that goal…
- The Trust operates at a less than 10% administrative overhead cost – all the rest of the premium collected is allocated to claim payments (your benefits) or reserves for future claim payments. Further savings are created by the Trust’s non-profit status. By comparison, AHIP, a health insurance industry group, reports that commercial health insurers typically pay 13%+ on their administration, overhead and taxes.
- The Trust uses the Aetna Provider Network and OPTUM prescription benefit manager to attain the best possible Rx discounts.
- Our Trustees meet quarterly and one of the primary purposes of their meetings are to review costs and seek opportunities to reduce expenses and control rate increases.
Western Grocers Trust commits to working hard every day to control your costs for benefits in every way possible.
Excerpts from an interesting article that will help explain why health insurance is so expensive in the US
From www.investopedia.com by Lita Epstein
Healthcare in the U.S. is about twice as expensive as it is in any other developed country. If the $3 trillion U.S. healthcare sector were ranked as a country, it would be the world’s fifth largest economy, according to Consumer Reports. The cost of this huge financial burden for every household because of lost wages, higher premiums, taxes and additional out-of-pocket expenses is more than $8,000.
Six key reasons the U.S. is failing to provide adequate health care at reasonable prices.
1. Administrative Costs
The number one reason our healthcare costs are so high, says Harvard economist David Cutler, is “the administrative costs of running our healthcare system are astronomical. About one-quarter of healthcare cost is associated with administration, which is far higher than in any other country.”
2. Drug Costs
Another major difference in health costs between the U.S. and every other developed nation is the cost of drugs. In most countries, the government negotiates drug prices with the drug makers, but when Congress created Medicare Part D, it specifically denied Medicare the right to use its power to negotiate drug prices. The Veteran’s Administration and Medicaid, which can negotiate drug prices, pay the lowest drug prices.
3. Defensive Medicine
Yet another big driver of the higher U.S. health insurance bill is the practice of defensive medicine. Doctors are afraid they will get sued, so they order multiple tests even when they are certain they know what the diagnosis is. A 2010 Gallup survey estimated that $650 billion annually could be attributed to defensive medicine. Everyone pays the bill on this with higher insurance premiums, co-pays, and out-of-pocket costs, as well as taxes that go toward paying for governmental healthcare programs.
4. Expensive Mix of Treatments
U.S. medical practitioners also tend to use a more expensive mix of treatments. According to a 2014 report by the OECD, when compared with other developed countries, for example, the U.S. uses three times as many mammograms, two-and-a-half times the number of MRIs and does 31% more Cesarean sections. This results in more being spent on technology in more locations. Another key part of the mix is more people in the U.S. are treated by specialists, whose fees are higher than primary-care doctors when the same types of treatments are done at the primary-care level in other countries. Specialists command higher pay, which drives up the costs for everyone.
5. Wages and Work Rules
Wages and staffing also drive up costs in healthcare. Specialists are commanding high reimbursements, and the over-utilization of specialists through the current process of referral decision-making drives health costs even higher. The National Commission on Physician Payment Reform was the first step toward fixing the problem; based on its 2013 report, the commission adopted 12 recommendations for changes to get control over physician pay. The Commission has gone on to work with Congress to find a way to implement some of these recommendations, although tangible policy outcomes have not yet followed.
“There is no such thing as a legitimate price for anything in healthcare,” says George Halvorson, the former chairman of health maintenance organization Kaiser Permanente. “Prices are made up depending on who the payer is.”
Providers who can demand the highest prices are the ones who create a brand everyone wants. “In some markets, the prestigious medical institutions can name their price,” says Andrea Caballero, program director at Catalyst for Payment Reform, a nonprofit that works with large employers to get some control on health costs.
Our next article will give you a list of 10 things you can do to help lower your cost for health care.