Without Your Health, You’re Broke: 4 Tips For Managing Healthcare Costs

So I think I just guilted a hospital into putting a few thousand dollars in my pocket?

Let me explain…

My knee has been acting up for months. 

I wish I could say it was a powerlifting or climbing accident…

But I’m pretty sure it’s just because I’m getting older and was sitting weirdly while working on a lengthy report about how “ESG” investing is a crock of crap that will boost a few stocks due to regulatory changes, regardless. (More on that in the future, maybe.)

I did the tests in this video and I’m 5 for 5 on signs that it’s probably a meniscus tear. 

But I ain’t a doctor. My qualifications include: knowing a few doctors and being previously married to an orthopedic surgeon.  

So I went to my primary care physician and explained what I was experiencing. 

She suggested an MRI. 

“Great,” I thought. “Getting this all sorted.”

Then I got this letter from my insurance company…

I speak Insurancese, so I can translate the letter for you:

“Whoa whoa whoa, you expect us to pay for this? There’s not a chance in the 9 circles of Dante’s EZ-bake that we’re going to hoark up the cashola for the one thing that will tell us, plain as a New York bagel bought by a lactose intolerant yentl, whether you actually have some floppy cartilage in that knee of yours.”

(My insurance company, for whatever reason, sounds like Dennis Miller.)

Anyway, they recommended 6 weeks of physical therapy first and an x-ray. 

Now… hear me out, reader. 

Normally I’m pretty zen about jumping through hoops. 

But time is money, and I have a high insurance deductible. (For my non-American readers, a “deductible” is the amount you pay for healthcare before insurance starts to pay. With a $6,000 deductible, you still have to pay the first $6,000 for healthcare out of pocket, regardless.)

Plus, I already pay out the wazoo for the best health insurance I’m able to get.

I figured: Man, I’ll be paying for all that out of pocket, anyway. Let me just find out what it would cost. 

I didn’t have to wait. 

Someone in the scheduling department of the hospital where I had scheduled my MRI called me to let me know my insurance wasn't going to cover jack diddly nothin’.

So I asked, “How much is it?”

“Huh?” came the response. 

“How much is it. I'll just pay for the MRI,” I said. 

The woman was flabbergasted. She didn't know how to process what I said. “It’s expensive,” she said.

“How expensive?” I asked. 

She said something like, "We bill $3000 to $5000 for it."

“Ok,” I said.

“Ok?”

“Yeah, ok. I’ll pay for it.” I would have had to pay for it anyway because of my deductible and 6 weeks of time I could otherwise spend working would have been more costly to me. 

(Having the income and savings to cover these sorts of setbacks is one of the greatest reasons why the pursuit of wealth is, in my view, a worthy ambition. I talk about that more here.)

The way this woman spoke to me, it was as though no one had ever thought to do this before. 

She had to talk to her supervisor. 

She had to talk to the billing department. 

When she got back on the line with me, she gave me some good news…

I could get on the schedule for an MRI that same day. 

And, get this, it would only cost me $330, so long as I could pay up front.

“Why, yes,” I thought. “I will gladly take a discount that would effectively put almost $4,700 back in my pocket that I would have otherwise spent.”

So I got my MRI. I’m still waiting on the results. 

When I posted about this on Facebook, one of my friends responded: 

“My deductible for my MRI was twice that... After I finally got it approved through insurance.”

Another friend replied:

“My disc replacement surgery was estimated to cost $200k if I were to go through insurance. We opted to pay cash, and were charged $20k.”

Lots of Americans have experienced something similar…

And that’s how the whole debacle I just described relates right back to YOUR wallet, reader. 

See, I spend a lot of time, as your surrogate Finance Daddy, talking about the economy and stocks and prudent responsible boring stuff like that…

However, I would be remiss if I didn’t also try to give you some tips for saving money and cutting down your expenses. 

And for Americans… aside from your house, if you can afford one, there’s unlikely to be any expense over the course of your life greater than healthcare. 

So let’s spend an issue talking about that. And at the end, I’ll give you a few quick ideas for reducing your healthcare expenses, the ones you have and the ones you are likely to have in the future. 

Healthcare: Stealing American Wealth

I think it'd be fairly nonpartisan to assert that the healthcare and insurance system in the U.S. is… not great. 

In fact, I might go so far as to call American healthcare “double-plus ungood.”

One of my first jobs as an analyst and copywriter in the financial publishing industry was working on a series of reports called “Wealth Stealers,” which included a hefty report on exorbitant healthcare costs. Here’s a relevant excerpt that’s pertinent to you (with some figures updated):

Most doctors are honest, hardworking, and caring. But that doesn’t mean they aren’t inadvertently stealing your wealth. They are really just the front line of tens of thousands of wealth stealers working for a multibillion-dollar industry that includes governmental agencies, major medical groups, insurance companies, and of course, the drug and surgical industries.

Fact: Because of the effects of inflation, a 50-year-old couple in 2019 planning to retire at age 65 can expect to spend about $405,000 on health care in retirement. A 40-year-old couple faces $455,000 in expenses, the report says.

Almost half of $1 million is a lot of money. But your medical bills can quickly climb much higher than that if you, or someone in your family, has a serious accident or gets a serious illness. Even people with relatively high-net worths—say $1 or $2 million—can see their wealth reduced to nothing in a matter of years.

Young people don’t think much about the cost of medical care. Why? Because they don’t have to. They are healthy… Apart from the occasional broken bones or having babies, you generally don’t need medical help when you are young.

As you move into middle age, you begin to deal with relatively minor but chronic issues such as acid reflux, joint and back pain, the threat of heart disease, adult-onset diabetes, cancer, etc. 

This is when our medical costs start rising. The typical American 50-year-old is taking ulcer, thyroid or pain medication, statin drugs, etc.

And then when you enter your 80s, the cost of medical treatment soars. I’ve seen various estimates on this—so I can tell you that there is some variation—but it looks to me like the typical U.S. citizen spends more than one-third of his lifetime medical spending during the last two years of his life.

And for many Americans, those last two years are miserable—in and out of the hospital, pumped up with drugs… if not laid out on a bed with tubes running in and out their bodies.

Medical care has become much more expensive. A lot more expensive.

Is the extra expense worth it?

We like to think that we have access to the best health care in the world and the best medical options ever available. But the fact is that if you subtract for infant mortality and AIDS (two very controllable causes of death), the average lifespan of an American or European is barely a year older than for an African.

And to quote Harvard Magazine:

The United States has many problems in medical care, from the large share of the population still uninsured (about 10 percent of us) to one of the lowest life expectancies in the developed world. Underlying all these problems is the high cost of medical care. We do not guarantee adequate access to medical care because we cannot figure out how to pay for it.

The harm from high medical spending goes well beyond the medical sector. Many firms have outsourced low-wage workers because providing them health benefits is too expensive. Government spending for schools and environmental programs are starved because resources go to health care instead. Warren Buffett called medical costs the “tapeworm of American economic competitiveness.” Oncologists have invented a term, “financial toxicity,” to consider along with biochemical toxicity in deciding on the appropriate treatment.

Simply put… it’s not hard to prove that the U.S. healthcare system is terrible. Toxic from root to branch. 

But you might wonder…

Why is American Healthcare so Very Expensive?

It’s complicated. Super complicated. 

We could blame the “hospital chargemaster,” which is really like a list of MSRP prices for services (set by individual hospitals and healthcare providers) they’d ideally like to charge insurance companies and customers. 

We could talk about how our high drug costs factor in the enormous expenses involved in developing, testing, and bringing a drug to market. (This is a cost that other nations the U.S. exports medicines to don’t have to bear–one of the reasons why your viagra is cheaper in Canada.)

We could also point to the finding that one-third of all medical spending in the U.S. goes to healthcare administration, which is largely caused by the perverse and slapdash bureaucracy created by insurance companies and hospitals in an effort to comply with bad regulations. (Case in point: The world doesn’t need medical-record coding or claim-submission specialists. Bureaucracies do.)

Heck, we can probably point to all three…

But the truth is: It’s all of the above and more. 

And there’s nothing we can do, as individuals, to fix it.

So What Can You Do to Keep Healthcare Costs Low?

Now, I could use this as a platform to drone on about the need for healthcare reform…

But I’m the Finance Daddy. 

Not the Finance “Let me Score Cheap Agreement From My Audience By Virtue Signaling and Recapitulating Political Cliches Back at Them” Person-Man.

Honestly, I highly doubt there will be any significant healthcare reform or single-payer healthcare system instituted in the U.S. this decade… or next decade.

Things are not the way they should be. 

But we can still be proactive about the way things are. 

So here are 4 lesser-known or discussed things you can do keep your healthcare costs down now and in the future:

1) Prevention is the Best Medicine

This was going to be the last item on the list, because it’s the least novel or interesting idea…

But it’s also the most important and will reward you the most over time.

Storytime: My father died in a… rather agonizing fashion because of pretty basic medical issues that were easily preventable and identifiable. That is, if he simply took care of himself better and didn’t put off seeing a doctor. 

I have over a dozen stories like this. 

I have two friends who died in their 40s because of health problems related to lifestyle. 

I’ve seen friends and family brought to the brink of bankruptcy and beyond because of preventable medical issues. 

And I’ve seen too many people die too young because they didn’t get routine checkups.

Look, if you’re not healthy, it simply does not matter how wealthy you are.

Without your health, there’s no point in trying to strive for wealth. 

Your body is the only one you’ve got, and the only one you’re going to get. 

So spend the time, effort, or money necessary to maintain the meat-vehicle surrounding your brain.

That could mean seeing a doctor or dentist for routine checkups, if you’ve been putting it off. 

That could mean getting in a little bit of physical activity every day. 

That could mean eating better. Or eating less. Or drinking less alcohol. (Talk about wealth stealers…)

All I’m saying is that, if you want your future to look better, in terms of your wealth and wellness, you need to start putting in the effort NOW. Today, if possible. 

2) Medical Vacations

So I learned about this from a friend… actually the same friend I spoke about here.

She needed to get some kind of dental work done (this is back in… 2006?). It was going to cost something like $20,000. 

At the time, she was a relatively broke temp worker with no dental insurance. But she had some cash saved up. 

So she took a two week vacation, booked a flight to Thailand, got her dental work done there, and got to spend her time recovering in a beach resort. 

The whole trip, dental work included, ended up costing a fraction of what it would have cost had she paid to have the work done in the U.S.

Her experience was my first exposure to “medical tourism.”

Medical tourism involves arranging, on your own or with a specialized travel company (of which there are many!), a trip to get some kind of medical work done by international doctors and facilities that are just as good or better than American ones.

What many people find is that the outcomes are better, the cost is cheaper, and on top of all of that, you get a vacation as well. 

Obviously this doesn’t work if you need, say, something life-threatening and immediate. 

But if I’m reading the data right, 90.4 of every 100 surgeries in the U.S. are elective, rather than an emergency.

Need some healthcare? Try to go elsewhere. 

3) Go Bargain Shopping

Because of the complexity of healthcare, most Americans don’t realize that they have the option to go hunting for bargains. 

But they can! And should! 

For example, in 2014 the average cost for a virtual telehealth visit was apparently about $45, while an in-person visit can cost as much as $176 per visit.

So if you are having a basic problem or want to get a referral or need prescription medicine or you have questions… 

Look into getting a telehealth appointment, which is basically a video call with your doctor. 

And on the plus side: With telemedicine, you don’t need to schlep to a doctor’s office and read Highlights magazine next to a gross aquarium while you wait for a doctor to pay attention to you for 38 seconds.

If you need lab work done, this site from GoodRx will let you compare labs near you and give you an estimated price, so you can choose the cheapest option.

GoodRx (these are not paid ads or affiliate links) also has a similar site that lets you look up and compare cheap providers of medications and also look up coupons and deals provided by pharmaceutical companies. 

And lastly, if you need an extremely expensive medication, many pharmaceutical companies offer discounts, deals, or charitable donations of medicine. You simply need to look up the company and see what options they have available for people like you.

4) Wheel, Deal, and Pay Cash When It Makes Sense

This closes the loop on the story I shared with you at the beginning. 

If you’re going to the emergency room, there’s not a lot you can do when it comes to keeping costs down. (Which is yet another reason why item 1, prevention, is so important.)

But whether you have insurance or not, you do have a say in how much planned or preventative healthcare will cost you. 

Any hospital or healthcare provider has a billing department… and much in the same way a used car salesman can “cut you a sweet deal, just because they like you,” a hospital billing department does have the power to drop what they charge you directly.

Oftentimes, you can simply tell the billing department what you can afford and make an arrangement (including financing or a payment plan) from there. 

So don’t be shy about ASKING to speak to a billing department and finding out what your options are… and if they’re willing to negotiate their prices. 

As with investing, putting in a little extra effort and time will pay you dividends in perpetuity.

All right, that about settles it.