Healthcare allowance

The tools may have changed-from cookie jars and ledger books to electronic spreadsheets-but keeping a family household budget is nothing new. As healthcare costs rise and traditional cost-sharing disappears, consumers need to wear the hat of a healthcare financial planner.

"Healthcare is no longer 'free,' " says Devon Herrick, senior analyst for the National Center for Policy Analysis in Dallas, "so consumers need a better understanding of their range of healthcare choices and how to save money. We plan ahead financially for other parts of our lives so why not healthcare?"

According to a survey of U.S. adults commissioned by Humana and conducted by Harris Interactive last year, only 20% know exactly what they spend on healthcare expenses, 32% are not sure how much they spend, and 44% are not confident in their ability to predict healthcare expenses in the coming year.

"These tools also are just as much about getting consumers to consume the right kinds of healthcare services-maintenance medications, screenings-as they are about getting them to think twice about marginally beneficial services," she continues. "Payers [and employer] know that if consumers make bad choices, they will be blamed, so they are racing to improve decision-making; however, the science of consumer decision support in healthcare remains primitive. The key to avoiding a consumer backlash is ensuring the tools are good enough and fast enough."

A MODEL FAMILY HEALTH BUDGET

Louisville-based Humana in partnership with Consumer Action, a national advocacy group, has developed a Family Health Budget to help its members and consumers nationwide manage their healthcare expenses and plan for the future. The strategy is part of Humana's ongoing member educational plan, which includes the Health Plan Wizard, guiding member selection of plan options offered by Humana's Smart products, and the Rx Calculator-a Web-based tool designed to help members project what their pharmacy costs will be and make a pharmacy benefit plan decision based on their budgetary and medical needs.

"The Family Health Budget encourages members to think forward as they would with other expenses," says Steve Jenkins, vice president of Sg2. He says budgeting tools are pushing a culture change. Arming consumers with more information-especially about costs-is becoming an imperative for making the right decisions.

The tool evolved from the Humana/Harris survey, which also shows that: 66% would like help in understanding and planning for healthcare expenses; among those who budget, 40% don't integrate healthcare into their budgets; 50% don't keep track of their healthcare spending in a given year; and 50% have no personal/family budget at all. Only 31% say they have a savings plan for healthcare expenses.

The healthcare environment is ripe for budgeting. With employer health insurance premiums rising by 11.2%-four times the rate of inflation, according to the Henry J. Kaiser Family Foundation-and more cost-sharing assumed by employees, consumers need to take a closer look at what they are spending for healthcare and how they can most effectively plan for the future. The Harris survey shows that as consumers pick up a larger share of the cost of healthcare, they recognize the need to be savvier about their choices.

Key to Humana's new initiative is the Family Health Budget Planner, a robust, online personal financial planning tool assisting consumers in determining how much they spend annually on healthcare and how much they should be saving for future expenses.