Healthcare costs are rising, and consumers are clearly concerned about it. Despite healthcare inflation running at lower levels over the past couple of years than at any point over the prior five decades, between 2005 and 2014 healthcare inflation outpaced the actual rate of inflation in every year except for 2008. That's concerning for consumers who aren't seeing much in the way of real wage growth.
With this in mind, we asked three of our Foolish contributors to offer a suggestion as to how consumers could potentially reduce their long-term healthcare costs. Here's what they had to say.
Here's a great way to reduce your healthcare costs: Get healthy, and stay healthy. In general, the fitter and healthier you are, the fewer diseases and conditions you'll likely develop. That can lead to fewer prescription drugs, fewer doctor visits, and avoiding dialysis and various surgeries.
One big way to reduce healthcare costs is to quit smoking. The American Cancer Society has detailed major health benefits of quitting, per various studies. For example:
-- 20 minutes after quitting: Your heart rate and blood pressure drop.
-- 1 year after quitting: The excess risk of coronary heart disease is half that of a continuing smoker's.
-- 5 years after quitting: Risk of cancer of the mouth, throat, esophagus, and bladder are cut in half. Cervical cancer risk falls to that of a non-smoker. Stroke risk can fall to that of a non-smoker after 2-5 years.
-- 10 years after quitting: The risk of dying from lung cancer is about half that of a person who is still smoking. The risk of cancer of the larynx (voice box) and pancreas decreases.
-- 15 years after quitting: The risk of coronary heart disease is that of a non-smoker's.
Exercising and taking in sufficient calcium can also strengthen your bones and slow bone loss over time, while exercise and weight loss can lower your blood pressure and reduce cholesterol, reducing or even eliminating the need for drugs to control them. They can keep diabetes away, too.
One well regarded study found that those who exercise just a little can lower their risk of premature death by 20%, while those who engage in moderate exercise for 450 minutes a week can lower it by 39%. Socializing is another way to improve your mood, and even your health .
Tending to your health can pay off handsomely -- in the form of a longer, less costly, and more enjoyable life.
If you and your family are relatively healthy, one of the best ways to hold healthcare costs down is to use a high-deductible health plan (HDHP). If you buy insurance on the marketplace, this is the equivalent of a Bronze Level plan. The biggest financial benefit of such plans is that the monthly premium you have to pay is often significantly reduced.
As a trade-off, however, you're responsible for all out-of-pocket payments up to a higher limit -- usually over $10,000 per family. Of course, if you're healthy, it shouldn't matter. But should unexpected emergencies arise, you may end up losing a lot of cash.
There is, however, a way to mitigate some of these costs. Health Savings Plans (HSAs) allow individuals to put away $3,350 -- and families up to $6,650 -- in pre-tax dollars to cover qualified medical expenses. If you're over 55, you can add up to $1,000 on each of those contribution limits.
Unlike Flex Spending plans some employers offer, the money in an HSA doesn't disappear on New Year's Day. In fact, you can invest the money and allow it to grow over time tax-free. Given that withdrawals from the account are also tax free so long as they are for medical purposes, you can save a lot of cash by getting an HDHP with an HSA.
As my Foolish colleague Selena points out, staying healthy and getting regular preventative care can play a big role in keeping your long-term healthcare costs down.
However, being an informed consumer can be just as important. I'm certainly not talking about searching online for your symptoms and trying to diagnose yourself -- that's what doctors are for. Instead, I mean being proactive in understanding your treatment options so as to minimize your costs.
Here are a few things to consider when visiting your primary care physician, or PCP. First, are there generic or biosimilar option available for the medication he or she is prescribing? Generic medicines are closely examined by the Food and Drug Administration and held to the same high standards that brand-name drugs are held. This means you could save 80% or more by requesting generic therapies from your PCP. By the same token, with biosimilars beginning to hit the market, consumers could be in line for discounts of anywhere from 15% to perhaps as high as 40%.
Another effective cost-cutting tactic is simply to ask your physician or insurer for a discount, or visit a drugmaker's website to see if they offer any sort of income breaks for low-income individuals or seniors. Although these can vary, most pharmaceutical companies do offer some degree of financial assistance if you can't afford your medication.
The key here is simple: be knowledgeable. You don't need to be able to diagnose yourself, but understand that there are probably options available once you have your diagnosis to lower your long-term healthcare costs.
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