Saturday, June 12, 2010

A look at some reasons medical insurance is expensive!

How much is spent on medical treatment vs admin? Medical insurance companies in Connecticut now list, often on the enrollment form, what their medical loss ration (MLR) was during the past year. This number tell us the percent of each premium dollar paid to them that goes to pay medical treatment expenses. Most small group medical insurance companies here in Connecticut have a MLR of about 85%.

Note: The new health reform law will require companies in the small group market to have a MLR of at least 80%. The MLR of most medical insurance companies here in Connrcticut have not had excessive administrative expenses.

Why have medical treatment costs been increasing so rapidly? There are many reasons including new and more expensive procedures plus over utilization of treatment. All the reasons together mean medical insurance companies have been required to charge ever increasing medical insurance premiums so they can pay ever increasing treatment expenses.

A look at some over utilization specifics! Studies tell us, when looking at this from a high level, between 20% and over 30% of the tests/treatments a person receives when they have a medical problem are considered unnecessary! In addition to increased costs for all of us extra treatment also increases our risk of a negative side affect. Examples of extra treatment:

+ Over use of antibiotics: MDs tell patients to take an antibiotics for a cold when it is not the most effective since a cold is a virus vs an infection!

+ Stomach acid: A study found over half of 100 million or more prescriptions, such as Nexium, were given to people with this condition who did not need such a powerful medication!

+ Back pain: This is reported to be the most over treated condition. It is not unusual for patients to be asked to get repeated MRIs! Why? Extra test are done in an effort to try to pin point the problem the person is reporting when in fact they would have gotten better without the test!

What can we do about this? A couple ideas to control treatment cost and risk to your health:

+ Talk to your MD and seek out more information about effective treatment. For example, the Mayo Clinic has a very informative page on their web site, which I link to on my site. It’s easy to use and has lots of information about numerous medical conditions.

+ Look for the cost of any suggested procedures. Why? There is considerable variation even in small areas in what providers charge for certain medical treatments. When you enter your city and state at the top of this site, then select a procedure, the cost at various providers will be shown.

Questions about all this – send a note.