Limiting Cost Sharing in Health Insurance
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.
Cost Sharing in the United States
If it’s being suggested that the U.S. change the way we’re doing things, how about a snapshot look at what cost sharing in health insurance looks like today?
- Private coverage requires patient cost-sharing and has exemptions or limits in the form of out-of-pocket spending maximums. These do not vary by income.
- Medicare, a public program for the aged and disabled, also requires patient cost sharing. They do have income related exemptions and limits for their cost sharing, and patients can purchase private supplemental insurance to help pay cover cost-sharing and anything Medicare might not cover.
- Medicaid and SCHIP (programs for low-income people and families) lets states require cost sharing only in certain circumstances. For example, Medicaid won’t allow cost sharing dependent on a child’s age, the family’s income and the type of procedure that is needed. Both these public programs won’t allow cost sharing over 5% of the family income.
France Takes the Croissant
A brief presented by the Kaiser Family Foundation looked at the United States’ cost-sharing versus that of countries with national health insurance systems; specifically, France, Germany and Switzerland. France’s organization of their cost-sharing system seems to beat the pants off of the competition, and statistics speak for themselves showing the least amount coming out of consumers’ pockets. In short:
- 6.7%- total out of pocket expenses
- 1.3 %- costs as percentage of household expenses
- $232- annual out of pocket payment per capita
Don’t be quick to assume that things are all the same across the board here in the U.S. though, cost and plan availability varies state to state.