Cost sharing, when you first hear it, might sound like a good thing. Something to help lessen the burden of costs you’re being socked with for your health insurance. Unfortunately, cost sharing in the United States often ends up to the detriment of the consumer, as health insurance companies raise their rates and have to ask consumers to pay a higher portion of what services cost. Sometimes insurance companies have to raise the rates for employers, who then have to turn around and raise the co-pays for their employers. It’s a vicious cycle, but other countries around the world have developed models to help lower and limit cost sharing that falls on the shoulder of consumers, and the United States might do very well to look into these models and implement them here. Especially with things as they are in our current economy, anything that can be done to keep hitting already weighed-down consumers with more costs should be a high priority.

What Exactly IS Cost Sharing in Health Insurance?

There are a few key specific points to understand when looking at the role cost sharing plays in health insurance. Direct forms of cost sharing between consumers and health insurance providers are things like the following: co-payments (what you pay per service), coinsurance (a percentage of the charge that you have to pay) and deductibles (the amount you have to pay out of your own pocket before coverage begins. This can be on all services or you can have a certain deductible on a type of procedure). Indirect cost sharing isn’t typically included in the standard definition of cost sharing in insurance, but they still cost consumers money and come right out of your pocket. These can be things like: charges when you go to see an out-of-network doctor, going to a specialist before seeing a primary care physician and being charged full price for that, any health services not covered by your insurance plan and health care premiums.

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In the past few years, you couldn’t turn on the television without seeing an advertisement for some new kind of drug. Erectile dysfunction, blood pressure, allergies, and restless leg syndrome (yes that is real) are all some of the drugs you may have seen splashed boldly in front of you on the screen. If you have been paying close attention, or just spend hours glued to the television, you may have noticed that drug ads have become less and less frequent throughout 2008. What’s causing this ad-less phenomenon, and is just due to the struggling economy?

Drugs Are Denied More Than Approved

Many drug companies are getting many of their fancy new drugs approved by the FDA and other regulatory bodies, so there’s no point in spending money advertising a drug that no doctor is going to buy and prescribe. If drugs are making it past the rigorous approval process, they are often drugs that target smaller population groups, like a cholesterol drug. There is no sense on spending millions on advertising on a drug that won’t be treating millions of people. According to figures from TNS Media Intelligence, U.S. drug ad spending dropped 6% in the first eight months of 2008, to $3.2 billion. That comes after a 3% dip in the full-year 2007, which had a total of $5.3 billion. Ad spending had generally been upward previously, peaking at $5.4 billion in 2006.

A Change in Media

You may not have realized this, but most of the ad spending done by drug companies is in the form of print ads. I don’t read magazines much anymore but when I did, I would see a ton of different drugs being advertised, varying heavily from magazine to magazine and their target audience. As with so many things, the trend now is headed toward the online world. People want their information in an instant, and web advertising can provide that. While you can easily flip through a magazine and read a drug’s information there, it is so much easier for a consumer to have an ad pop up on their screen, click on it and then read all the information they ever wanted to know about a particular drug. It makes complete sense to funnel money into online advertising (but then again, I encourage everyone to get online, whether it’s for fund raising, communication or shopping). Drug giant AstraZeneca told Dow Jones Newswires that some 20% of its consumer marketing budget was for digital advertising this year, up from around 15% in 2007. 1/5 of a company’s marketing budget going toward making sure online consumers get the drug message? It seems smart to me on the part of the drug companies.

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Where to Go From Here

It may seem like there is no aspect of our country that isn’t an utter mess right now. Big banks are being bailed out, the auto industry is flailing like a car in the river and as we see here, the health care industry is rapidly falling ill to this economic virus. Is there any hope? I feel that there is. We have a new President with new ways of thinking around how health care and insurance should be offered, and while I don’t hang my hat on things changing immensely and immediately after the old administration departs, I do think they are on course to change for the better. How much worse can it get? The road to change has to be one we travel.

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One of the key components to making sure that there’s enough money and health care available for all of us living in the United States is plan, plan, plan. If experts were just to estimate what the population will be in a particular year (and much of it has to be some speculation) or if age and gender breakdown weren’t taken into consideration, health care providers would find themselves with a huge demographic portion needing care and with no money available to serve them with. Luckily for all of us, the National Health Care Expenditure Accounts Projections Team (NHCEAPT) is all over this type of things, and they have identified a trend that all of us, from young to old, should be aware of. Here is what we can expect to see through the year 2017 (doesn’t that year just sound so scifi?) and some suggestions on how we can be prepared for it.

Get Ready Medicare: Here Come the Baby Boomers

Baby boomers are little kids rocking out and bopping around to some music on the stereo. A “baby boomer,” a term created by the U.S. Census Bureau, is used to describe anyone born right after World War II, when everyone was so happy to see one another return home safely that all they did was sit around and make babies. The decade is usually considered between the years of 1945-1955. My parents? Proud baby boomers. And soon enough, people like my folks are going to be needing to access public programs like Medicare. According to the folks with the NHCEAPT, the outlook for national spending in the next eight years calls for steady growth. Spending growth is projected to be 6.7 percent in 2007, similar to its rate in 2006. Average annual growth over the projection period is expected to be 6.7 percent.

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Health care providers have to have seen this coming. It’s not like we woke up one morning and saw “Hey, the country’s in a recession.” The economic downturn was gradual and glaringly obvious, and people and organizations everywhere did their best to make preparations. However, many states throughout the United States are preparing to make drastic and unprecedented cuts in health care funds, and this couldn’t be coming at a worse time for consumers. The unemployment rate in December was 7.2%, which was up from November’s 6.8%. There doesn’t seem to be a light at the end of the tunnel any time soon (you can’t help but feel bad for the complete mess that Barack Obama is inheriting) and it is important to know how these health care cuts might affect you and your family.

Health Services for Poor First to Go

Obama has been promising since the inception of his campaign that he wanted to extend health care coverage to include more affordable and widely available health insurance to those in lower income brackets. Now, before he has even been sworn in as the next President of the United States, states are already tossing programs like these out the window. Many states have been gung-ho in the fight to expand their coverage for the working poor, but with the state of the economy the way it is, these once hopeful programs are getting the boot. And the working poor are now becoming more steadily just the “poor,” as jobs continued to get slashed across industries.

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The term “Medicaid issues” is rather vague, and you can let your fingers do the walking online if you are wanting to learn more about Medicaid plans. Medicare Advantage, however, is more specific. These are health insurance plans that are a part of the Medicare program, and they include things like:

• Medicare Health Maintenance Organization (HMOs)
• Preferred Provider Organizations (PPO)
• Private Fee-for-Service Plans
• Medicare Special Needs Plans

The interesting thing is that these plans do exist and are available under Medicare, so it is only my educated guess that Health Net was lobbying to reduce restrictions here as well, possibly opening the doors to more potential members and not barring people for health issues.

Considering that Medicare is intended to provide health care to our elderly population, trying to keep people from getting health coverage based on preexisting medical conditions is pretty absurd. You show me one 75 year old who has made it that far in life without bringing any medical baggage along with them and I’ll buy you a cookie.

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