Slash health insurance costs; nine money-saving strategies you can use today - includes related articles on how Forbes magazine reduced its health costs by 25 percent, health insurance options

Home Office Computing, Oct, 1994 by Wesley J. Smith

National health insurance--it's all the rage. Turn on a television newscast, flip on a radio talk show, or read a newspaper and chances are you'll find a discussion about the latest ideas for national health insurance. Yet even as the political wars rage over President Clinton's proposal, Senator Dole's proposal, and all those inbetween, most entrepreneurs face the equally difficult task of finding reasonably priced health insurance today. For many, the effort is long and frustrating as they soon discover that the term affordable health insurance is quickly becoming an oxymoron.

Take Harv Simmons, a self-employed real estate broker located in Sparta, Wisconsin. Simmons works hard and plays by the rules--as Clinton likes to put it--yet he is furious about his health insurance costs. "We're getting cleaned out everywhere we go," he says, the bitterness apparent in his voice. "Our monthly premiums are $628 for my wife and me. In fact, they went up just last week from $548--and we've both been healthy. There's something wrong with the system."

Simmons is 59, six years away from affordable Medicare, and his wife, Diane, is 51. Both have had some health problems in the past, but they have long since been treated and are currently in good shape. Still, because of their ages and health histories, they now pay more than $7,500 per year just to insure their medical fate.

Families like the Simmonses find themselves increasingly caught between the proverbial rock and a hard place. Health insurance is one of the nation's most important services. Without it, you may not be able to obtain health care, except in a lifeor-death emergency. Yet health insurance premiums continue to soar, seemingly in defiance of the laws of gravity and economics. The often absurd costs threaten to force many working Americans out of the health insurance market altogether.

Even so, sizable savings can still be gained when buying health insurance. Look at 45-year-old Craig Kubey, an independent writer from Davis, California, who spent considerable time comparing health insurance polices and investigating how to save money. In doing so, he came up with some practical methods for reducing costs. "I'm a lawyer," says Kubey, "although not in active practice. Being a lawyer, however, lets me get health insurance through the State Bar of California, giving me access to group rates that are lower than individual rates. I've also selected a high deductible, since that offers a much better value for a reasonably healthy family."

If you, like Kubey, want to contain your own health insurance costs, it will take perseverance, a pragmatic approach, the time to investigate options, and the imagination to seek out any angle. Here are nine moneysaving approaches to pursue. (See "Health Insurance Options," for background on your basic choices.)

Cut Health-Care Costs Considerably Unfortunately, because pure fee-for-service health insurance gives insurance companies only a limited ability to control costs, such policies are priced way out of sight. But there are several ways to retain the benefits of fee-for-service insurance while reducing the premium burden.

Raise your deductible. If you currently have a $200 deductible, consider raising it to $1,000 or more per individual. That can save you a significant amount of money, since the insurance company will not have to be concerned with paying for treatment for sporadic and less serious medical problems. At the same time, you do not dramatically increase your own risk, since you will still be insured against a wide range of serious health problems.

How much can you save by raising your deductible? According to the Health Insurance Association of America, a 40-year-old could keep about $40 per month by increasing his deductible from $500 to $1,000. A 50-year-old's premium would be reduced by approximately $65 to $75 per month.

Look at the "Raising Deductibles" chart at the top of the next page. The prices were quoted by Mel Budnick, insurance broker and owner of the Trident Insurance Agency in Woodland Hills, California, and are for the Blue Cross Classic Prudent Buyer, for Los Angeles County, in July 1994. The individual monthly premiums on the chart are for a man 30 to 39 years old; the family premiums are for parents in the same age range. (Older people would pay higher premiums, younger people, lower. Rates also vary based on the area in which you live, your individual health history, age, and other factors.)

In the chart examples, an individual raising his or her deductible from $250 to $2,000 saves $110 per month or $1,320 per year. A family deductible notched up the same amount saves $336 monthly or $4,032 each year. That's a lot of savings with a minimum of extra risk.

Increase your copayments. Another way to reduce your premium is to increase your share of copayments. For example, if your insurance currently covers 80 percent of the reasonable cost of services, decrease it to 50 percent. Such a move, however, will increase your personal risk; you will be responsible for an additional 30 percent of the total cost of your care (plus the initial deductible). But there will also probably be a concomitant cut in your premiums.