(MONEY Magazine) -- Rising medical costs hobbled General Motors and Chrysler, and they're swallowing up state budgets. The country's long-term financial prognosis is grave largely because of health care entitlements.
And if you haven't gotten a raise lately, you can partly blame the spike in your employer's insurance premiums, up 9% since last year, according to Aon Hewitt. Even if you did get a raise, you probably didn't keep much of the cash: The same survey found that out-of-pocket health costs rose more than 12%.
If trends continue, health spending will be a quarter of the economy in 2035. Something has to give -- and you are about to feel the impact.
Employers, insurers, and the Medicare system are desperately trying to squeeze out savings without throwing away the good things modern medicine can do. This isn't just about health care reform; a lot of what you'll see in the coming years was in the works before that bill passed, and will likely continue even if courts or Congress pare back the law.
Much is already happening, or will force you to make decisions as soon as the next open-enrollment season.
While there is a great deal to be optimistic about, not every health care "innovation" on the way will necessarily be good news for patients.
To navigate the health care system of the (very near) future, you'll need to be prepared for six big changes.
Within just four years the nation is projected to have 63,000 fewer doctors than it needs, says the Association of American Medical Colleges. About half of that shortage will be in primary care.
Already in cities such as New York and San Diego, the average time to get an appointment for a physical has shot up to 20 days, according to a survey by the consultancy Merritt Hawkins. In Boston, at the extreme, wait times are more than 60 days, and many practices are turning away new patients.
So it's more and more likely that when you look for routine medical care -- from diagnosing a sore throat that you worry might be strep to managing your high blood pressure -- you won't even see an MD.
Nurse practitioners (NPs) and physician's assistants (PAs) are playing a bigger role in the kind of front-line medicine that family doctors often provide, says Mark Friedberg, a health policy researcher at the Rand think tank who's also a primary-care physician at Brigham and Women's Hospital in Boston.
The change is already obvious at the growing number of retail store walk-in clinics, where flat fees for various procedures are posted on the wall like a menu. Insurers increasingly cover these clinics, and sky-high annual deductibles on many plans are pushing more people toward such low-priced alternatives.
But it's not just at Walgreens where you're seeing more NPs and PAs; it's also in your doctor's office. Lots of group practices have been hiring NPs.
Meanwhile CMS, the agency that runs Medicare, has launched efforts encouraging a new kind of practice called the "medical home." Such practices will join up groups of primary-care physicians, along with NPs and PAs, pharmacists, dietitians, and perhaps social workers, to provide comprehensive care, usually with the physician as a kind of quarterback.
"More of patients' interaction will not be face to face with doctors," says Friedberg.
The potential upside is that the non-MDs will be able to provide some services that patients were going without, such as regular nutrition advice for people trying to lose weight, as well as quicker access to appointments for regular care.
What you need to know: Probably the first question on your mind is "Who are these people -- and what are their qualifications?"
NPs are more than nurses. Generally, in addition to an RN's license and a four-year bachelor's in nursing, they'll hold a graduate degree that requires two years of coursework -- including at least 700 hours of clinical training. NPs can prescribe medications and in some states work without a doctor's supervision as primary-care providers.
"I would say 99% of what comes in the door is something I can treat," says Sophia Thomas, a New Orleans-area nurse practitioner who is the only primary-care provider in her office.
PAs have to work with a doctor; they'll typically have either a specialized bachelor's or master's degree.
If you're at all worried that you have a problem serious enough that you must consult a doctor, insist on a doctor. But seeing the hardest-to-get degree on the wall isn't everything.
NPs are often better trained and more experienced than docs in teaching patients how to manage chronic conditions, says Roland Goertz, an MD and president of the American Academy of Family Physicians.
Just make sure that all the people you are seeing are communicating. If you've been to an NP at a retail clinic or outside your physician's office, make sure the doctor has a record of the care you've received and anything you've been prescribed. Keep a record for yourself too.
Say you want to see a specialist about your nagging knee injury. Or maybe you've been told you'll need surgery. How do you know which doctor or hospital to go to?
Today it's still mostly a matter of referrals, word of mouth, and guesswork. Although insurance plans are pushing people to become savvier health care consumers by imposing higher deductibles and co-insurance rates, the fact is that there has been little useful information at hand about prices or results.
But insurers are constantly collecting that information -- and they're finally getting it out there.
Cigna, for example, is using claims information and new national databases to sort out how much hospitals and doctors' practices are charging, and to find out about the quality of care.
Cigna can measure the mortality and complication rates of a hospital's patients, how many doctors in a specialist practice are board certified, and how frequently certain gold-standard guidelines -- such as giving patients with high-blood pressure an annual test for kidney disease -- are met.
Cigna customers can go online to find out whether a specialist practice ranks as especially cheap or especially good. If your employer has signed on for the option, you'll pay a lower co-insurance rate when you pick a provider who scores well.
Cigna is on the cutting edge of this trend, but most of the big insurers are collecting similar data, and experts like Paul Keckley of the Deloitte Center of Health Solutions say that within three years this type of financial incentive will be commonplace.
What you need to know: Transparency has enormous potential, but it's still early days. If you have a doctor you trust and your insurance company suddenly ranks him as mediocre or expensive, the data aren't strong enough yet to justify simply ditching him. Raise the issue with him at your next appointment, says Elizabeth McGlynn, a health policy researcher recently at Rand.
Right now, for example, Cigna is measuring just group practices, not the performance of individual doctors. And measurement is messy: A 2010 Rand study found that when common profiling methods are used, about 22% of physicians end up in the wrong cost category.
Use your insurer's information as a tool to narrow your options but not to eliminate a provider you'd otherwise want to use.
Beyond insurers, there are a few sources of data you can tap on your own.
Medicare publishes hospital readmission rates and patient reviews at Hospitalcompare.hhs.gov and is beginning to build a similar physician site.
In several states -- including Massachusetts, Minnesota, and Oregon -- nonprofits and government agencies are putting quality data online. Go to informedpatientinstitute.org to discover what's available in your area.
The rough economics of medicine today is simple: Have a test done, and there's a charge for that.
See your doctor for a 15-minute office appointment, and there's a charge for that too.
This model is called fee for service. It drives Medicare -- the system's 500-pound gorilla -- and many economists and health care wonks think it's also a big driver of the rise in health spending.
It's not that doctors are subjecting people to procedures just to pump up bills (it's bad practice, and most doctors are plenty busy as it is), but that there's simply little incentive for them to spare a moment to weigh the cost and benefit of that one extra test.
Perhaps just as important are the steps they aren't paid for, like coordinating with each other to design a care plan for you or having a nurse call you to make sure you aren't having problems with your medications.
The big idea to remedy this is something called the accountable care organization, or ACO. It got a big boost from the health care reform law, which will encourage ACOs via Medicare.
Unlike HMOs -- the last big idea to change doctors' priorities -- it might not be obvious that you're in one of these networks. Your ability to choose your doctor probably won't change; instead the ACO could be a "virtual" organization of primary docs, specialists, and hospitals, and you'd be assigned to one based on which providers you use most.
The group would be paid more by Medicare and health insurers if it showed it could keep overall costs down while meeting quality standards.
That's all pretty abstract, but it could be a financial spur to set up more medical home practices, where a team keeps tabs on your health so that you're less likely to end up in the ER or the OR (see Big Change No. 1).
"I think it will work much better for the patient and the physician," says Jeffrey Selwyn, a primary-care doctor for more than 30 years who plans to join an ACO that will include a community hospital in Tucson and as many as 40 specialists and 50 primaries initially.
What you need to know: Should you be worried about this latest effort to get you to spend less? The ACO does give doctors a reason to say no to a costly procedure or drug.
On balance, a bit more "no" could be a good thing: Influential research out of Dartmouth's medical school, for example, has found that patients in Miami tend to get more treatment than those in Minneapolis -- without better results.
And ACOs are supposed to reward providers for better quality, not just cost cutting. But a shift in your doctor's incentives is something you ought to be aware of.
"If we do it right, doctors should be improving care, but if the payment models are badly implemented, doctors may instead try to skimp on care," says Elliott Fisher, a Dartmouth medical professor who helped develop the idea of ACOs.
If you've heard that an ACO has been set up in your area or that your doctor has joined one, talk to her about it. Ask how she thinks it will change her practice. And there's nothing about an ACO or a medical "home" that stops you from getting a second opinion -- never be afraid to use that option.
Today some large companies offer free health services such as on-site clinics, and many use financial incentives to encourage workers to engage in healthy activities.
You may nab, say, $100 in cash or a $15 lower monthly premium for having your cholesterol and blood pressure checked, participating in a weight-loss program, or filling out a detailed health-risk questionnaire.
But companies won't stop there.
"They are basically saying, 'We are spending a ton of money on you; we want you to be doing the things you should be,'" says Helen Darling, president of the National Business Group on Health.
Within the next few years, to enroll in your company's most generous plan, you may have to get an annual exam, fill out a health assessment, or get a bio-metric screening.
Otherwise you'll be stuck in a bare-bones plan with big deductibles and co-insurance, says Tracy Watts, a benefit consultant at Mercer. About 14% of large companies plan to use this strategy this year. Eventually you may have to fulfill these requirements to get any company policy, says Darling.
What you need to know: By law, you can earn insurance discounts of up to 20% for toeing the company's health line, and starting in 2014 that jumps to 30%, with some wiggle room for regulators to raise it to 50%.
Legally, however, companies can push only so far, says Tom Bixby, a health care attorney in Madison.
When your employer asks you to achieve a certain outcome, such as losing weight or lowering your cholesterol, it must always give you an alternative way to get the same discount if your doctor says this is too hard or inadvisable.
The number of large firms offering a health plan to retirees has steadily declined, and that drop is about to speed up. Why? For retirees older than 65, reform is improving Medicare's prescription coverage.
That will shrink the gap between government benefits and private plans, which makes it easier for firms to just give you cash to buy Medicare supplemental plans, says actuary Mark Olson of Towers Watson. For some that could be a good thing: You might be able to more closely tailor your benefits to your needs. But not all firms will provide enough cash to make it a wash.
Likewise, in 2014, the number of companies offering plans to early retirees will probably nosedive. Starting then, insurers must offer coverage to everyone, including people with preexisting conditions, without charging higher rates to those with health problems.
Reform also provides tax credits to help purchase coverage. As those rules put individual policies within reach of more older people, explains Deloitte health actuary John Schubert, more companies will drop the benefit.
What's stopping them from doing so now? Not much, legally. But ensuring health coverage is often a management tool for easing older employees out the door; the new law will make that carrot less valuable.
What you need to know: If you're already retired and currently have a private health plan, you might want to get to know the mechanics of Medicare plans like Part D for drugs and Medicare Advantage.
If you hope to quit the daily grind before age 65, be sure to factor in the price of an individual policy when you are calculating how much you'll need for retirement.
A healthy couple at 61 before 2014 could pay $1,160 a month if both spouses are healthy, or as much as $1,770 if both have a chronic condition, says Jim O'Connor, an actuary at Milliman.
For estimates, call a health care insurance agent (find one at nahu.org). After 2014, health isn't a factor. Both couples would pay about $1,623 a month before any subsidies.
Medicare Advantage plans, which are privately run, government-paid regional health plans that you can opt for instead of regular Medicare, have drawn in about 24% of retirees.
Advantage plans restrict your choice of doctors but can offer lower copay rates, or dental, vision, and drug benefits.
The trouble is, the plans cost the government considerably more per patient than regular Medicare, and critics point to the fact that on average about 13% of payments to Advantage plans goes to nonmedical costs, including administration, marketing, and profits.
Medicare recently tightened the rules for Advantage plans, which has led to insurers leaving the market altogether.
And the new health care law cuts payments to the private plans, which will cause more insurers to quit, says Stephen Zuckerman, health economist at the Urban Institute. Others will be dropping some benefits, such as dental or vision, or hiking out-of-pocket costs.
What you need to know: Although your choices will narrow, you shouldn't write off Advantage plans. You'll probably still be able to pick from at least a handful of plans in your area.
During the annual Medicare enrollment period, which is Oct. 15 to Dec. 7 this year, it is vital that you go to medicare.gov to analyze your Advantage options.
Advantage plans limit you to a provider network. So if you split your time between two places, travel frequently, or simply want to be able to see the best specialist for a particular ailment, stick with the traditional program, plus Part D prescription drug coverage, and add on a supplemental Medigap plan if you want more coverage.
Advantage plans usually cost less per month than the traditional program plus supplemental coverage, but you'll often pay more should you get sick, warns Bonnie Burns of California Health Advocates. Looks like one thing's for sure about the future of health care: The decisions won't be getting much easier. But your choices will make a difference.
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||4.09%||4.17%|
|15 yr fixed||3.15%||3.19%|
|30 yr refi||4.10%||4.19%|
|15 yr refi||3.18%||3.21%|
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