Medical costs have been rising consistently over the last several years, far outpacing inflation and driving many individuals into bankruptcy. There are a number of issues that lead to the problem. Advancements in medicine are expensive, the population is aging so medical care is more in demand, and poor preventative measures mean bigger ailments are being treated. These reasons are difficult, if not impossible, to rein in to manage costs of healthcare as a whole.
There are other aspects to the healthcare system that contribute to the increasing costs. One large aspect is bureaucracy. There is a perception that individuals have the ability to comprehend, manage, and make choices about their own care. However, as stories like this show, we are ill-equipped to make ourselves savvy consumers.
The whole idea behind a market is that consumers will choose among businesses competing for the consumers’ money. However, in the healthcare market, consumers have a number of issues that prevent their decision-making process from being effective. For one thing, sometimes the consumer-patient is not even conscious to make a decision. Even if they are, no one gives them an idea of what things will cost, who is going to charge it, or what they should expect. As a result, patients who are hospitalized for any amount of time will often receive a mountain of medical bills from each individual physician, the hospital itself, and sometimes different wings within the hospital.
To make matters worse, even if the patient was informed of the costs involved, it would consist entirely of hypothetical pricing. The hospital bills differently depending on who will actually pay the bill. Insurance companies generally pay significantly less than uninsured patients. With the increased reliance many young healthcare consumers are placing on high-deductible plans and Health Savings Accounts, simply understanding the bureaucracy behind medical billing could be the first step toward driving down costs.
Ironically, for more elderly clients, the lack of a market may have been driving up costs. Medicare has historically used a fee-for-service system. However, over the course of the last year the government conducted an experiment to determine whether competitive bidding would save taxpayer money. It did. In fact, competitive bidding cut costs by 42% for medical equipment such as oxygen equipment and wheelchairs. Because of the cost-sharing method between Medicare and patients, individuals also share in the savings.
If the experiment holds true as it is expanded throughout the country (intended for 2016), introducing the market to Medicare may save beneficiaries significant amounts of money each year, while also saving taxpayers. Ensuring that you will qualify for Medicare when you need it should be part of your comprehensive estate plan. You should also consider whether you qualify for V.A. Aid & Attendance benefits and whether a QMap or QVap trust might be right for you and your family.
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