Controlling health care costs: some practical advice

Helping veterinarians and their families address the ever-rising cost of health care is one of the goals of the AVMA Group Health and Life Insurance Trust. The best results are achieved when this task is undertaken as a collaborative effort. Because the Trust is motivated by insureds' benefits as opposed to profit, it already provides advantages, including group purchasing power and careful cost control. In addition, there are several actions that insureds can take to help manage their health care costs.

Prescription drugs consume a large percentage of national and personal health care bills. Generic drugs offer one of the most effective ways to help keep prescription drug costs down. Brand-name products with generic equivalents may be used with confidence, as these drugs are chemically identical to their brand name counterparts. The difference is the price—generics typically cost 30 percent to 75 percent less.

This example illustrates the average potential savings if an individual enrolled in AVMA GHLIT Plan C ($500 deductible) were to switch to AVMA GHLIT Plan X ($1,500 deductible). Even if the full deductible were incurred, Plan X would still be more affordable.

Most of the Trust's medical plans provide insureds with the incentive of better benefits for generic drugs when compared with benefits for brand-name drugs. While many physicians routinely prescribe generics, each individual should inquire about generics with every prescription.

Individuals with GHLIT's Preferred Provider Organization plans who have a chronic condition requiring maintenance medicine have a second way to save money on prescriptions by ordering their prescriptions by mail. The cost reduction in mail order comes through savings to the insured's out-of-pocket costs. Pharmacy prescriptions are typically limited to a 30-day supply, while a 90-day supply can be obtained through the mail. The Trust mail-order program charges only two co-pays for a 90-day supply versus three co-pays that would be charged at retail. In essence, the individual saves 33 percent on the cost of their prescription.

Managing prescription costs is one way to lower costs; being vigilant and proactively addressing health care issues is another.

Most veterinarians preach prevention to their clients, and the same advice is good for veterinarians as well. Preventive care helps find health problems when they are often more easily treated, and can help prevent costly emergency care. Many of the Trust's medical plans provide benefits to encourage preventive care. In recent years, the Trust has improved coverage to include an Enhanced Wellness Benefit that pays for certain expenses before the deductible is met, and a higher Lifetime Maximum Benefit to expand coverage. In addition, the Trust sponsors a Wellness Center at each AVMA Annual Convention as part of the group's longstanding commitment to preventive care and health screenings.

Another way to save money on premiums is to switch to a higher deductible. The savings from the difference in the premium may exceed the increase in the deductible—and rewards the individual willing to assume a little more upfront risk. Because annual deductible limits are often never met, most individuals can reduce premiums by raising their deductible at a fairly low risk. (See the illustration for an example of potential savings.)

A qualified, high-deductible plan paired with a Health Savings Account may provide even more savings. In effect, an HSA provides a tax-sheltered environment to save for future medical expenses. The HSA contributions are deductible from gross earnings for federal tax purposes, and interest on HSA balances accumulates tax-free. These funds may be used for all qualified medical expenses, and withdrawals are not taxed. Unused funds roll over from year to year. In addition to out-of-pocket costs such as prescription drug costs, HSA funds may be used for prescription eyeglasses, dental visits, radiographs, many over-the-counter medicines, and many other qualified medical expenses that are not covered by the GHLIT HSA-qualified plans. (Insureds should consult with their accountant or tax adviser before opening an HSA to determine whether this savings vehicle is appropriate for them.)

Making smart prescription drug choices, being proactive and preventive in one's approach to personal health care, and taking a look at the HSA option are key ways to address health care costs. There are also a number of smaller but effective actions and ideas to keep in mind.

Flexibility is one concept. Insureds who are willing and able to work with doctors and hospitals in a network can save money with a PPO plan. PPO plans allow an individual to see any doctor, but the plans pay a higher percentage of the cost of care for in-network providers versus out-of-network providers.

Checking statements is another cost-saving idea. Scrutinize doctor, laboratory, and hospital bills for mistakes. Look for common errors such as duplication of charges or charges for tests, medications, services, or supplies that were not performed or provided. Check hospital bills for charges dated before or after the patient was admitted, or for incorrect room charges such as for a private room when the patient had a semi-private room.

Occasionally something that appears odd on a statement is not merely an error, but is actually fraud, providing one more good reason to check bills carefully. Those insured with GHLIT have back-up from the Special Claim Services Department to help identify and investigate questionable claims. In 2006, the SCS identified $145,594 in fraudulent claims.

An annual health insurance check-up is one final way to take stock of health care costs. AVMA GHLIT agents are always available for consultation and advice.

The AVMA GHLIT program is underwritten by New York Life Insurance Company (New York, NY 10010). For more information on GHLIT plans, including eligibility, rates, renewal provisions, exclusions, and limitations, or to find a GHLIT agent in a particular area, call the Trust office at (800) 621-6360.

* Rates are subject to change each May 1 and Nov. 1. The annualized premium presented in this illustration was based on the May 1, 2007, rate for member-only coverage, age 50 to 54, in area 3, and does not include any medical underwriting rate surcharges. Rates change on the Nov. 1 coinciding with or following the date the insured attains a higher age bracket.