Platinum Patients, risk, and finding security for the future
Americans spent $3.4 trillion on healthcare last year. If you divide that by the number of people in the country, it comes out to $10,350 for every man, woman and child.
“But wait,” you say. “My family of three did not spend $30,000 on healthcare. Not even close.”
You’re not alone. Most people won’t spend anywhere near that amount. In fact, an estimated five percent of the population accounts for 50 percent of total medical costs. This small population, which goes by several names: platinum patients, super-utilizers, frequent fliers, is made up of people with chronic illness, people receiving end of life care, and victims of accidents or violent crime.
5 percent of the United States is roughly 16.4 million people. This group accounts for about $1.7 trillion in healthcare spending, which is about $104,000/year per person. If you remove this population, you have 310 million Americans spending $1.7 trillion, which is about $5,500/year per person.
So if we didn’t have any “super-utilizers,” healthcare costs could be halved. But people get sick, get old, and chronic conditions are a reality! Health insurance must account for the entire population.
Protecting Your Family, Intelligently
The bad news is that healthcare costs are still going up, meaning insurance premiums are going up. You may have noticed that your deductible is going up too. Companies are transferring the responsibility of healthcare costs to their employees more and more. Many companies simply can’t afford the coverage they once offered.
Hot take: getting ownership of your healthcare can be a good thing.
The best, most cost-effective way to protect your family in today’s healthcare environment is to pair a high deductible health plan with a health savings account (HSA). This approach gives the consumer more power, more flexibility, and lower costs than traditional health insurance.
A high deductible health plan, also called a consumer-driven health plan, protects your family from unexpected medical expenses and emergencies. It also means lower premiums. But you can’t stop there. Take those premium savings and put them into a health savings account (HSA), which is a basically a tax-advantaged savings account that can only be used for medical expenses.
Why an HSA? There are two big reasons: HSAs can lower your federal income tax, and accrue interest tax-free. Second, HSA money rolls over year after year, meaning you’re building for future expenses.
With this approach, if your family happens to be the unfortunate 5% who has serious medical needs, you’re covered. For those who don’t have hardly any healthcare expenses, this approach means you’re building security for the future, and paying less now. In almost all scenarios, a consumer-driven health plan paired with an HSA is more affordable and more effective than traditional insurance.
Better For Businesses
Employer-sponsored health insurance is a tremendous burden for the companies who provide it. In fact, in 2016, only 56 percent of businesses were able to provide employer-sponsored coverage. Want to attract talent and grow your business without providing health benefits? Good luck.
To be able to provide coverage, companies are having to pay smaller salaries and raise deductibles. Part of the problem is that companies are still trying to offer traditional insurance in a healthcare landscape where traditional insurance is no longer the smart option.
Companies who adopt consumer driven health plans and give their employees HSAs experience lower premiums, and at the same time give their employees security for the future. Companies who take those premium savings and contribute to their employee HSAs experience the greatest benefit.
The most attractive part of this approach for employees is that healthcare dollars roll over year to year, and gain interest. In time, employees can cover their deductible using HSA dollars. Furthermore, HSAs encourage employees to be smart about their healthcare, because it’s their money, rather than some unknown third party. Those with HSAs are more likely to compare prices, and choose care more carefully than those with traditional insurance. This means costs stay down, and premium renewal rates can stay down for the company as a whole.
Why companies should us consumer driven health plans and HSAs:
- Employees who take ownership over their healthcare spend less, meaning premium renewals are lower.
- HSAs provide an excellent opportunity for employees to build security for the future.
- HSAs roll over year to year, instead of evaporating like an insurance premium.