Cost Sharing

What is cost sharing?

It is a simple term used to describe the shifting of healthcare costs from the insurance company to the patient.

• The term cost sharing usually includes deductibles, coinsurance and copayments, or similar charges, but it does not include premiums, balance billing amounts, or the cost of non-covered services.

Policymakers like to say higher cost sharing in private insurance has helped to slow the growth of healthcare costs in recent years. But this is only one side of the story.

• Insurance companies argue that unless the member has some "skin in the game" he or she will not use healthcare services wisely. There used to be some truth to this idea.

♦ But with deductibles going to unheard of heights more people are afraid to seek medical care even when they know they should.

Cost sharing affects premiums

The general rule is that the lower the plan’s cost sharing the higher the plan’s premium will be.

Or the lower the premium the more you will pay when you use the insurance.

♦ When choosing a plan you should consider which you are the most comfortable with, paying a higher premium but having lower costs when you use health care services or a lower premium and higher costs.

You need to take into consideration your age and health condition.

• If you can anticipate using expensive services it may be to your advantage to pay a higher premium in order to reduce your share of costs.

The Affordable Care Act has shined a new light on the issue of cost sharing. Many people are now questioning if insurance companies have gone too far in shifting responsibilities to the consumer.

♦ The goal of the law was to cover more of the uninsured, many whom could not qualify for or afford health insurance. The law made it possible for many people to finally be able to buy health insurance.

But now many people have found they cannot afford to use their new insurance because of high cost sharing requirements.

♦ This is happening while insurance company profits are at an all-time high.

Many of the policies in the state and federal marketplaces have significant cost sharing in the form of high deductibles and coinsurance.

♦ High cost sharing creates more financial burdens for the seriously ill and low income families.

So while the law had good intentions, high cost sharing is actually a barrier to care for many people.

Read about Health Insurance Deductibles and more…