Health-care cost management has become important because an increase in inflation has pushed the price of health care even higher. A lot of people were optimistic that the different programs and policies implemented by employers, insurers, and the government during the 1990s to manage the rising costs would help to cushion such increases for an indefinite period (Stanton 3).
Nonetheless, for the past few years, the increased cost of health care has become an issue of growing concern. Increased health care costs result in increased health insurance premiums. This has been necessitated by the increase in overall inflation, and this eats into the workers’ earnings. Consequently, those employers who provide their employees with health care coverage feel under pressure and can even contemplate dropping the coverage entirely or reduce the comprehensiveness of the coverage provided.
Individuals who have to cater to the health care coverage on their own also feel the pressure and some are likely to default, increasing the number of individuals without health care insurance (Stanton 6). Both the federal and state governments also feel the pressure of the rising health care costs because these health care programs that happen to be publicly funded have to compete for funding with other vital government spending priorities. Government and family budgets are also affected adversely by the rising health care costs. However, there are strategies in place that when implemented, they can help us to reduce health care cost:
- Employer contribution methods: employers should not dictate to their employees the kind of health care plan that they need to stick with. Instead, they should be given the option to choose their plan of choice. Regardless of the choice made by the employees, employers should be committed to making their contributions towards such plans.
- HMOs and competition: in highly competitive markets HMOs are likely to result in reduced costs because they often substitute hospital visits with ambulatory care.
- Cost-sharing: higher copayments and deductibles end up saving money for third-party players and insurers but the sad reality is that the consumer’s out-of-pocket expenses increases. Individuals who have the lowest income end up bearing the heaviest burden, along with Medicare beneficiaries who lack Medicaid, and people with chronic health conditions. As such, the adoption of this strategy may be faced with mixed feelings.
- Hospital mergers: savings accruing from the merging of two hospitals can be less than the expectations. Nonetheless, when two hospitals merge, they are likely to charge less in comparison with a competing hospital operating as a standalone.
- Flexible spending accounts: participants of this scheme should be encouraged to spend money on medical services at the end of the year, otherwise, they risk losing this money once the year ends. Such money should ideally be exempted from taxation and this could act as an incentive to individuals to spend on health insurance because of the increased affordability.
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