PowerPoint PresentationHealth Care CostsWhy Does Health Care Cost So Much?Slide 4What is Being Done About the High Costs of Health Care?What Can You do to Reduce Your Personal Health Care Costs?Health Insurance and Financial PlanningSlide 8Slide 9A Good Health Insurance Plan Should..Types of Health Care CoveragesSlide 12Slide 13Health Insurance Policy ProvisionsSlide 15Trade-Offs in Choosing a PolicyPrivate Sources of Health Insurance and Health CareTypes of Managed CareGovernment Health Care ProgramsMedical WebsitesLong Term Care ?’sDisability Income Insurance and Financial PlanningSlide 23Four Sources of Disability IncomeChapter 11Health and Disability InsuranceHealth and Disability InsuranceMcGraw-Hill/IrwinCopyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.Health Care Costs•The US has the highest per capita medical expenditures of any industrialized country in the world.$7,761 health care costs per person in 2005.This amount is twice as much spent on health care as the average for the 24 industrialized countries in Europe and North America.Medical expenditures were 6% of the GDP in 1965, but rose to 16% of our GDP in 2005 and are predicted to be 17% in 2011.11-2Why Does Health Care Cost So Much?•High administrative costs. 26% of health care dollar vs. 1% in Canada.•Use of sophisticated, expensive technologies.•Duplication of tests and technologies.•Increases in the variety and frequency of treatments.•Increasing number and longevity of elderly people.•Regulations that result in cost shifting rather than cost reduction.11-3Why Does Health Care Cost So Much?•Increasing number of accidents, crimes that require emergency services.•Limited competition, restrictive work rules in the health care delivery system.•Labor intensiveness, rapid earnings growth for health care professionals.•Innovative treatments for AIDS, cancer.•Built in inflation in health care delivery system.•Malpractice Insurance.•Aging baby boomers11-4What is Being Done About the High Costs of Health Care?•Careful review of fees and charges.•Establish incentives for... Preventive care.Services provided out of the hospital where medically acceptable.•Involve community in balancing health care needs, health care resources.•Encourage prepaid group practices.•Support community health education programs so people take better care of themselves.11-5What Can You do to Reduce Your Personal Health Care Costs?•Stay well - focus on prevention.Eat a balanced diet, keep your weight under control.Avoid smoking, don’t drink to excess.Get enough rest, relaxation, and exercise.Drive carefully, watch out for accident and fire hazards in the home.11-6Health Insurance and Financial Planning•45 million Americans have no health insurance.•An older student population is not covered by their family’s policy. 40% are older than age 25.•Health insurance limits the financial burdens people suffer due to illness or injury.•It’s part of your overall risk management plan to safeguard your family’s economic security.Disability income insurance protects your most valuable asset - your ability to earn an income.11-7Health Insurance and Financial Planning•Group plans comprise more than 90% of all health insurance.•Most group plans are employer sponsored; employer pays part or most of the cost.•1996 Health Insurance Portability and Accountability Act provides federal portability standards, nondiscrimination in health insurance, and guaranteed renewability.If you changes jobs you need not lose your health insurance.•Individual insurance is also available. (continued)11-8Health Insurance and Financial Planning•You can supplement your group policy.The coordination of benefits provision in a policy says that benefits received from all sources are limited to 100% of allowable medical expenses.•COBRA requires many employers to offer employees and dependents the option to continue their group coverage for a set period of time following a divorce. (continued)11-9A Good Health Insurance Plan Should..•Offer basic coverage for hospital and doctor bills.•Cover at least 120 days hospital room and board.•Provide at least $1,000,000 lifetime maximum for each family member. •Pay at least 80% of out-of-hospital expenses after yearly deductible of $500-$1,000/person is met .•Impose no unreasonable exclusions.•Limit your out-of-pocket expenses to no more than $3,000 to $5,000 in a year, excluding dental, optical, and prescription costs.11-10Types of Health Care Coverages•Basic includes…Hospital expense insurance.•Hospital room and board and other charges.Surgical expense insurance.•Surgeon's fee for an operation.Physician expense insurance.•Pays for physician’s care that does not include surgery, such as office visits, lab tests and X-rays.11-11Types of Health Care Coverages•Major medical expense insurance.Covers expenses for a serious injury or long-term illness. Has a deductible, coinsurance, and a stop-loss provision.•Comprehensive major medical insurance. Low deductible offered without a separate, basic plan. Covers hospital, surgical, and other bills.•Dread disease and cancer insurance policies.Focus on unrealistic fears, and only pays out for very specific conditions. Often sold by people working on commission. Poor value.(continued)11-12Types of Health Care Coverages•Hospital indemnity.Pays a fixed amount for each day you are in a hospital. Best for people in high-risk groups. •Dental expense insurance.Covers exams, cleaning, x-rays, fillings, root canals, and oral surgery.•Vision care.Exams, contact lenses, and glasses.•Long term care insurance.Growing faster than any other form of insurance. (continued)11-13Health Insurance Policy Provisions•Eligibility.Varies with age, marital status,and dependency.•Assigned benefits.Insurance pays your doctor or hospital directly.•Internal limits.Fixed amount per day for a hospital room.•Copayment.Cost sharing in the form of a flat dollar amount you pay, such as $15.00 per office visit or $10 per prescription.11-14Health Insurance Policy Provisions•Service benefits vs. fixed $ amount•Benefit limits - maximum $ amount or maximum # of days in the hospital.•Exclusions and limitations.•Coordination of benefits - coverage under more than one policy.•Guaranteed renewable.•Cancellation and