Most anyone you talk to would agree that the cost of health care can be overwhelming in today’s marketplace. If you look at historical data for the last 100 years, you would see that as more and more people obtain health insurance, the cost of the medical care has increased. From an economic standpoint it makes a lot of sense. As we pay for insurance, the actual health care we receive seems relatively cheap (or, in fact, already paid for) and so we tend to use more of it rather than less. Because we want more, there must be more providers. In order to get more providers we must pay more to entice people from other professions into nursing, billing, etc. This then makes our cost of insurance go up.
It saddens me to see the issue raised so often during this coming Presidential campaign to fix the health care crisis. Yet, the only solutions we see are adding more people to government sponsored health insurance programs. No one has yet to do anything about the actual cost of the health care itself. Thus, we will continue in this cost increasing spiral for longer. If the cost to go see a doctor was cheaper, and people could afford it without insurance, then covering people on insurance plans wouldn’t be the issue it is today.
In light of all that, and seeing that the health insurance for my family was around 8% of my gross income every year, I decided to see how I might be able to reduce that amount as a savings.
First, I am a contract employee working in IT. I get paid by the hour and have no paid vacation or holiday time. My employer pays some percentage of my health insurance, but none for the rest of my family. My wife home schools our son and watches a young child for pay during the school year (at least through this school year). Thus, to cover my family through my employer medical and dental plans, it costs me roughly $700 a month (pre-tax dollars). (I really don’t like that they take that all out of the first paycheck every month rather than splitting it up amongst all of my paychecks for the year.)
Because those dollars are coming out pre-tax, it is really only costing me $525 per month. If I wasn’t paying for that insurance from my paycheck, I would be paying approximately $175 extra in taxes each month (25% of $700). That’s still a tough chunk to swallow when you don’t use much medical care during a given year.
My thinking was that I could find a policy that was much cheaper per month with a considerably higher deductible than the $1,000 employer reimbursed deductible I currently have. While that would mean more out of pocket deductible for me, it would also mean I would only spend those dollars if I was actually using health care services, not just in case.
I started by investigating Blue Cross/Blue Shield of Missouri. They have an online quote program you can use to find your policy cost. I found a policy with a $5,000 deductible for approximately $250 per month for the family. There was also an added $50 for dental, which brings the total up to about $300 per month. Much better, I think. That will reduce my out of pocket expenses by $225 per month if we don’t use any health care.
However, that only adds up to $2,700 a year of savings (about 2.5% of the budget), just over half the individual deductible and could leave me with very large deductible payments should more than one of us have medical problems during the year. Perhaps if we already had a real emergency fund, it could be worth it to run that risk for the savings, but I this point, I think I’m going to have to look elsewhere for some real budget cuts.
