How to Tame Your Health Care Costs

Published January 1, 2003

Want to know the best way to dramatically reduce your health care costs over your lifetime? Choose healthy parents. Wake Forest University researchers suggest genetic influences are at least as powerful as–and perhaps even more powerful than–blood pressure level, age, gender, weight, where you live, or whether you have diabetes or such illnesses such as coronary artery disease.

But don’t get discouraged. You may not be able to choose your parents, but there are choices you can make to cut your health care costs. Here are just 10 of them.

1. Know your health insurance plan’s rules. Then follow them.

There are thousands of different health insurance plans nationwide, each one as different as the insurer or employer that sponsors them. If you don’t have a clue whether you need a pre-authorization for outpatient surgery or whether your allergist is in your health plan’s network of doctors, you can wind up paying significantly more money than you should for your health care.

Never rely on what you think is true about benefits or providers covered under your plan–even if that information is stated in your most recent benefits handbook. Always double-check whether the benefits, services, or providers you need are covered under your plan before you receive treatment. Do this by calling your plan’s customer service department. Then follow through by obtaining any necessary authorizations or by scheduling treatment with a doctor within your insurer’s network of providers.

If you don’t follow the rules, you’ll wind up getting stuck with the bill.

2. Pick the health insurance plan that gives you the most bang for your buck.

Don’t automatically select the cheapest plan. You have to weigh the value of your health plan vs. its price. If you go with a cheap health plan but it doesn’t pay for the benefits you need, you are not getting good value for your health insurance dollars.

If you’re young and healthy, you might want to go for lower premiums and higher co-pays. But if you’re older, have a chronic health condition, or have young children who make frequent visits to the doctor, you’re probably better off with higher premiums and lower co-pays.

3. Cut your pharmacy costs.

Most health plans have a three-tier co-payment system for prescription drugs. The lowest tier is the least expensive and includes generic drugs; the middle tier is made up of medications your insurer considers “cost effective”; and the top tier features the most expensive brand-name drugs. You can cut your costs by $10 to $40 per prescription by asking your doctor to prescribe you drugs in the first two tiers.

If deemed medically appropriate by your doctor, you can split pills to save money. [See “Study: Pill-Splitting Saves Money, Is Safe,” Health Care News, December 2002.] For example, if the medication you need comes in 50 mg and 100 mg tablets, and you need 50 mg per day, ask your doctor if he will prescribe you the 100 mg tablets and then you can split them.

Pill splitting is not appropriate for all medications and may even be dangerous in situations where exact dosing is medically necessary. Consult your doctor.

4. Take advantage of tax breaks.

Consumer-driven health plans, flexible spending accounts (FSAs), health reimbursement arrangements (HRAs), and medical savings accounts (MSAs)–known collectively as health care spending accounts–are becoming more popular. One of the most popular is the FSA, an employer-sponsored account that offers you a way to pay for certain out-of-pocket health care or dependent care costs on a pre-tax basis.

Dental and vision care count as reimbursable medical expenses under FSA arrangements, so don’t forget to save your receipts for these services.

5. Lose weight.

According to a March 2002 RAND Corp. study, being obese adds $395 each year to your average $1,500-per-year health care costs, more than smoking (an addition of $230), aging 20 years ($225), and problem drinking ($150).

Medical experts say about 1 in 3 Americans is overweight, and 1 in 5 is obese, based on the body mass index (BMI). The BMI is an individual’s weight divided by height squared. Between 1991 and 2000, obesity in the U.S. rose 60 percent, while smoking rates have been cut roughly in half since 1964.

Not only is being overweight bad for your health, it can bankrupt you if you are unable to obtain individual health insurance because of it and you suffer a serious illness or injury.

6. Exercise more.

It’s more difficult to quantify what you’ll save in health care costs by exercising more, since this number is also linked to losing weight through dieting. But generally speaking, exercising not only improves your health, it saves you money when you purchase life insurance because healthy people live longer, and longer life expectancies mean better life insurance rates.

Many studies show it’s never too late to start exercising. Even small improvements in your fitness level can improve your health and longevity.

7. Seek out free or low-cost health screenings, checkups, and services.

Does your HMO offer free blood pressure checks? Low-cost flu shots or nutrition, dieting, and physical fitness classes? Take advantage of these programs to help you stay healthy and reduce your doctor visits and medications.

8. Raise your deductible or co-payment.

Whenever possible and financially practical, lower your monthly health insurance premium by raising your deductible or co-payment. But make sure you have money saved to cover the deductible.

9. Haggle with your doctor.

There’s nothing new about people asking for discounts on medical treatments–there’s a long history of patients negotiating with their providers for lower prices on elective procedures, such as laser vision surgery or psychotherapy. So establish the price you believe is reasonable and go for it.

10. Search for a subsidy.

If you are uninsured, disabled, or have a low income, you should see if you qualify for free or low-cost health insurance through a state or federal program such as Medicaid or Medicare. Additionally, if you have a low income or are uninsured, your children may be eligible for free or low-cost health insurance through the Children’s Health Insurance Program.

Vicki Lankarge is the retired senior editor at, The Consumer Insurance Guide.