Healthcare Costs

The United States continues to spend more on healthcare than other nations, but there are signs of positive change. For the fourth year in a row, growth in health insurance premiums actually declined across the nation.

As healthcare leaders in the United States, Blue Cross and Blue Shield companies continue working hard to keep healthcare quality-driven, accessible and affordable. Blue Cross and Blue Shield of Louisiana pays out 85 cents of every premium dollar to cover the costs of hospitals, physician services and prescription drugs for our customers. We use only 7 cents of each premium dollar for administrative costs. Yet our nation still struggles to bring healthcare costs under control.

Learn more about rising healthcare costs and how we work to control them by viewing the information and videos below. You can also hear our CEO, Mike Reitz, speak about how your premium is spent and what other issues our industry is facing by viewing his Open Mike video series.

Why are healthcare costs rising?

Health insurance companies base their premium rates on the amount of claims they've paid in the past and what they expect future claims to cost. When insurers pay out more in claims than they receive in premiums, and when future services are predicted to cost more, premiums must go up to cover these costs.

Many factors contribute to the rising cost of medical care. Some of the factors are things that consumers, healthcare providers (doctors, hospitals and other healthcare professionals) and insurers can work together to control.

Other factors are beyond anyone's control. For example, no one can control the fact that our population is getting older. And people tend to have more medical needs as they grow older. When you multiply the higher cost of each service by a greater demand for more services, you have an equation for higher costs.

Here are some of the factors that contribute to the cost of healthcare:

  • Advances in medical technology - State-of-the-art technology gives us early diagnoses, less intrusive procedures and better outcomes. But it comes with a huge price tag.
  • Prescription drug advertising - $293 million was spent for a single sleep drug in 2007.
  • Government mandates and regulations - Federal or state requirements add $10 billion per year to health insurance premiums.
  • More consumer demand for the latest drugs and treatments - This is part of the reason healthcare costs are going up.
  • Treatment for the uninsured and underinsured - This causes overall insurance premiums to rise for those who do have coverage. More than 47 million Americans do not have health insurance, including about 700,000 Louisianians.
  • Litigation, class-action lawsuits and malpractice insurance - These costs add $5 billion to premiums overall.
  • Overuse of emergency rooms for routine care - The emergency department is the most expensive place to receive medical treatment.
  • Fraudulent medical billing and insurance abuse - This costs Louisianians as much as $1 million per day.
  • Cost shifting - This occurs when doctors and hospitals need to cover the cost of treating patients who can't pay their bills.
  • Pressures on healthcare providers - These include a nationwide shortage of nurses and the need to invest in the latest medical technology.
  • Unhealthy and unsafe lifestyle choices - A host of serious illnesses, ranging from heart disease to diabetes to some cancers, are linked directly to poor diet and lack of exercise. Smoking, alcohol abuse, driving while intoxicated and lack of seatbelt use all contribute to accidents and illnesses that drive up healthcare costs.

As you can see, there are many different factors that contribute to the cost of healthcare. Together, these factors ultimately drive up the premiums you pay for health insurance. Getting the cost of healthcare under control is not an easy task to accomplish. It will take the efforts of healthcare providers, health insurance companies, lawmakers and consumers - working together and as individuals -  to have an impact.


What is Blue Cross and Blue Shield of Louisiana doing about rising healthcare costs?

For years, Blue Cross and Blue Shield of Louisiana has been a leader in the fight to keep healthcare affordable. Some of our work is easily seen, such as anti-fraud efforts that saved our members nearly $5.5 million in a two-year period.

Other cost-cutting projects are more complex and behind the scenes. But each day we take our responsibility to manage your healthcare dollar very seriously.

Here are some ways we work for our customers to control your costs:

  • Negotiate with doctors and hospitals to provide you with quality medical care at competitive rates. Our contracts with providers save our members hundreds of millions of dollars each year.
  • Keep our administrative costs as low as possible - we currently spend only 7 cents of each premium dollar on operating costs.
  • Cost containment activities such as care management for complex illnesses, coordinating payment with other coverage you might have and pharmacy programs.
  • Develop new and innovative products with affordable coverage options.
  • Encourage the use of generic drugs that are safe, effective and affordable.
  • Fight healthcare fraud, waste and abuse, saving members millions of dollars every year.
  • Actively participate in the legislative process to keep lawmakers informed about healthcare affordability.
  • Work with active Louisiana medical professionals to learn more about treatment options that provide quality medical care at affordable rates.
  • Audit and manage provider claims to ensure accurate billing and identify mistakes.
  • Emphasize wellness and prevention through initiatives such as our customized wellness program, My Health Commitment, offered to all members at no extra charge.
    • Work with the Blue Cross and Blue Shield Association, a collection of 39 independent Blue Cross and Blue Shield plans, on a variety of programs and services that lower costs for all members.
    • Continually seek ways to use technology to become more efficient and cost-effective.

These examples represent just a few of the ways Blue Cross employees work to make our own processes more efficient, educate providers and assist customers in keeping healthcare costs as affordable as possible. It's important to remember that Blue Cross and Blue Shield of Louisiana doesn't deliver healthcare; we finance it for you. You trust us with your premium dollars, and we work for you.


What can you do to help control your own healthcare costs?

Your role in the process is simple: be the best consumer of healthcare services you can be.

That's not to suggest you don't seek needed medical treatment. We just encourage you to make informed choices about when to seek medical care and from whom.

When you shop for other goods and services, you want to know what you are getting, how much it will cost and how it will benefit you. You strive not to waste your hard-earned money. The same holds true with your healthcare needs. Everyone can play a part in helping to hold down healthcare costs.

Here are some things you can do:

  • Make healthier lifestyle choices. Exercise regularly, eat a balanced diet and keep stress to a minimum.
  • Practice prevention. Get regular physical and dental check-ups, schedule recommended health screening tests and get your annual flu shot.
  • Take an active role in your care. Choose a primary care doctor to coordinate your care, and take time to build a good relationship with your doctor.
  • Keep the word "emergency" in emergency room. Seek help at an emergency room for deep wounds, chest pain, severe burns or serious trauma. If possible, visit an after-hours clinic or wait to see your own doctor.
  • Don't insist on an office visit or antibiotic prescription for a common cold.
  • Ask why tests and treatments are being done, if they are really necessary and what your options are.
  • Carefully review your doctor and hospital bills. Be on the lookout for duplicate billings, inaccurate dates and charges for supplies, medications or tests that you didn't receive.
  • Discuss prescription medications with your doctor. Ask if a generic drug or over-the-counter medication is appropriate for your condition.
  • Request samples when trying a new medication.
  • Avoid overuse of antibiotics. The Centers for Disease Control estimates that one third of the 150 million outpatient prescriptions for antibiotics written each year in the United States are unnecessary.
  • Take your medication as directed. Keep taking it and finish the prescription even if you feel better.

Where Does Your Blue Cross Premium Dollar Go?

 

  • 84 cents goes directly to paying your medical expenses
  • 13 cents pays taxes and fees
  • Less than 3 cents goes to emergency reserves that would allow us to pay claims in the event of a catastrophic event.

    *Physician services include doctor visits and services, imaging and outpatient services not performed in a hospital. Source: Louisiana Health Service and Indemnity Co. and HMO Louisiana, Inc. 2008 financials