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The book, The New Health Insurance Solution
Old 05-12-2006, 03:36 PM   #1
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The book, The New Health Insurance Solution

Several people here have mentioned that they are reading The New Health Insurance Solution by Paul Pilzer, with his book and website coming up in several discussions on this forum. Yesterday I borrowed his book from the library and did a quick read. His general proposition is that the market place will take care of the health insurance issues in this country if we just let the free market operate. He maintains that individual health insurance is widely available at reasonable cost and people, including employers and employees, should take advantage of the individual market for health insurance. I believe he tends to force the facts to fit this basic proposition.

He is easy to read with a breezy style. The book has pretty good explanations of HIPAA and COBRA and a number of good tips. However, health insurance in the United States is complicated. The price he pays for simplicity is accuracy and thoroughness. It is a pretty good book if you are 35, perfectly healthy, and thinking about buying insurance. But what is good for when you are 35 is not necessarily good 5, 10 or 20 years later. (Should I pay for drug coverage?. . . pregnancy coverage?) I would never rely on this book for making policy decisions or for forming opinions on healthcare in the United States. I strongly disagree with many of his policy recommendations.

Some problematic propositions from the book:

1. Several places in the book he claims that insurance companies in the individual market only turn down or place exclusions on 20% of applicants and 80% are accepted as healthy. He uses this statistic to support his idea that most people can get coverage in the individual market. I don’t know about the accuracy of this statistic, but one problem is that people who are uninsurable often do not apply for insurance on the open market. They stay on their employer plan. They go into a risk pool. They buy a conversion plan. Etc. Even Pilzer advises against applying for insurance if you think you might get turned down. So the healthy gravitate to these plans and the unhealthy do not.

Pilzer doesn’t discuss what “healthy” might mean and his discussion of the underwriting process doesn’t describe what are the typical issues that exclude people from coverage. He does not address the possibly of the healthy fleeing to cheap plans while the unhealthy are trapped in what they already have, causing greater cost disparity.

2. For those who say they can’t afford health insurance Pilzer claims that “If your annual income is below the federal poverty line, about $20,000 for a family and $10,000 for a single individual—you probably qualify for Medicaid.”

This simply is not true, unless you have children at home, are disabled, or meet some other special category. Low income alone does not qualify a person for Medicaid.

In this same vein, he claims that of the 45 million uninsured, 16 million earn more than $40,000 for a family of four ($20,000 for a single) and 29 million earn less. He assumes that the 29 million earn at least $20,000 if a family and $10,000 if single. Otherwise he claims they would be on Medicaid. He maintains that these low income families could easily buy a low cost HSA plan. But how are they going to pay those big deductibles? Also, his cost data is for people age 35 and their families. In most states, the older you are the more expensive insurance gets. In this discussion, he ignores the issue of underwriting and possible exclusions for preexisting conditions and ignores the fact that in most states, this population could not afford the risk pool which runs on the average, 200% the cost of the same plan for a healthy individual.

3. “Despite what you read in the newspapers, there are health insurance options
available for every American, although it may take you some time, effort and expense to get them.” This is one of his soundbite quotes he uses in advertising materials for his book. This is misleading. Insurance on the individual market is not available for many people. The risk market policy will have preexisting condition exclusions and may have coverage riders unless you are coming off of a group plan and have HIPAA rights. The risk market may be unaffordable. If you don’t have HIPAA rights, there may be no option for you at all in some states.

4. He states that “the premium you pay for an individual or family policy cannot be raised each year, nor can the policy be canceled based on your health or your prior year healthcare costs.” He mentions this several times in the book. At best this is a case of overgeneralization, at worst it is a misleading statement to support his thesis that individual health insurance is the solution to our insurance woes.

I have read a lot about health insurance. Federal law requires guaranteed renewal of individual health insurance plans. Does this mean that rates cannot change based on your health status? Many state’s insurance regulators think so. But that does not make it law. Most states allow rates to increase based on age. Some states’ laws do provide that your rates can’t go up based on your personal health situation. But other states have no laws that apply and in general, the individual market is not highly regulated. From what I have read, experts are not in agreement as to the extent re-underwriting occurs on renewal and insurance companies are not very forthcoming with information about why a particular person’s rate increases. Some experts believe that re-underwriting is occurring more and more by a number of insurance companies. Also, some insurers have durational rate settings. This means that your insurance costs can go up considerably after a few years. At that time, you can reapply for a lower cost policy, but can be denied if you are not in good health.

4. Pilzer repeatedly claims that individual health insurance is cheaper than employer provided insurance. It probably is cheaper if you are 35 and healthy. Probably not if you are 60. This is because employers charge the same rate to everyone, whether you are 20 or 60. Also, only 4% of people in the US have insurance on the individual market. So it is a small part of the overall market. Pilzer doesn’t break down what that market looks like as to age and health of its participants.


5. Pilzer’s discussion of the uninsurable and state subsidized programs like riskpools leaves much to be desired. Mostly because there is so much state variability. This is another circumstance where I really disliked that he used figures applicable to a 35 year old male. The costs are considerably higher for those 50 and over. He fails to mention that some risk pools have low lifetime limits and other restrictions.

6. Pilzer pushes the idea that small employers should go to a reimbursement model, leaving their employees to buy health insurance on the individual market. Employers with older/sicker employees are in fact facing higher costs. However, their employees are going to have problems getting insurance on the open market and may end up with only very high cost options. The employer that has a young and healthy workforce already has lower costs.


I think you get the idea.







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Re: The book, The New Health Insurance Solution
Old 05-12-2006, 03:44 PM   #2
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Re: The book, The New Health Insurance Solution

Thanks for the review of this book, Martha. I think I'll check it out from the library as well. Healthcare is one of the major unknowns for me as I look at RE down the road ...
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Re: The book, The New Health Insurance Solution
Old 05-12-2006, 04:28 PM   #3
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Re: The book, The New Health Insurance Solution

Wow! I'm really impressed! Are you a speed reader.

Thanks for the review. Healthcare is also one of our big concerns for RE and is one of the next things on my study for FIRE.
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Re: The book, The New Health Insurance Solution
Old 05-12-2006, 09:03 PM   #4
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Re: The book, The New Health Insurance Solution

Very good review Martha. Thanks.
I also have the book with me from the library. I only sampled some parts for the moment and came to the same conclusions.

The book gives some good advice but also has an underlying thesis about "everyone should get personal insurance, employer should not provide"
Even though I agree , it doesn't solve our individual problem at this time. I also don't think it will solve the health care issue if the risk is not average on to healthy and sick individuals. I am not sure that he got to the inevitable conclusion that ALL SHOULD BE INSURED therefore it should be MANDATORY in order to fix the cost problem. (but I didn't finish the book yet)
The only two ways of achieving the goal of insuring everyone that I know is to make it mandatory and be a real market (insurance competes for your business) or a single payer system subsidised by taxes.

He provides a pretty good picture of the state of affair; however some claims from the book seem to be not applicable in every state. Which would be impossible for him anyway as laws, costs,... are so different accross the country.

About medicaid requirements: the disagreement may be because medicaid is applied very differently from state to state.

Even with its shortcomings I was happy to have a decent picture of the differences between states (end of the book). And to have a section for self-employed individuals.

*******

On a different subject I am a little bit annoyed that it seems that there is no conduit for medical reimbursements for S-corporation. All that I now is HRAs, MSAs... do not apply to S-corp.

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Re: The book, The New Health Insurance Solution
Old 05-12-2006, 09:32 PM   #5
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Re: The book, The New Health Insurance Solution

Quote:
Originally Posted by IBWino
Wow! I'm really impressed! Are you a speed reader.

Thanks for the review. Healthcare is also one of our big concerns for RE and is one of the next things on my study for FIRE.
Quote:
Originally Posted by Lusitan
Thanks for the review of this book, Martha. I think I'll check it out from the library as well. Healthcare is one of the major unknowns for me as I look at RE down the road ...
Not for me, when the time come I'm just going to ask Martha

MB
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Re: The book, The New Health Insurance Solution
Old 05-12-2006, 09:38 PM   #6
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Re: The book, The New Health Insurance Solution

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Originally Posted by mb
Not for me, when the time come I'm just going to ask Martha

MB
Uh, MB I hate to break it to you, but there has been some behind-the-scene discussion of Martha charging for her health insurance consultation services. So you better not count on "just asking Martha" unless you're prepared to pony up some cash.

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Re: The book, The New Health Insurance Solution
Old 05-12-2006, 10:43 PM   #7
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Re: The book, The New Health Insurance Solution

Ahh, you just set back FIRE another year
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Re: The book, The New Health Insurance Solution
Old 05-13-2006, 07:21 AM   #8
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Re: The book, The New Health Insurance Solution

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Originally Posted by perinova




Even with its shortcomings I was happy to have a decent picture of the differences between states (end of the book). And to have a section for self-employed individuals.

*******


You can get his state by state guide online at http://www.tnhis.com/statebystateguide.htm

I agree that the guide is helpful in doing a state comparison. But the prices are based on a 35 year old male so the numbers can increase substantially as you age and in some places are higher for women.
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Re: The book, The New Health Insurance Solution
Old 05-13-2006, 10:33 AM   #9
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Re: The book, The New Health Insurance Solution

Prices higher for women? Would that be for younger women in age of having children? For what area?

That would be nice to have some guidelines for prices vs age or health status. It is VERY difficult to estimate ahead of time what the cost that would be. And health insurance cost is now close tothe highest of all our expenses we have to wigh very carefully where to go.

To give an example a family living in NJ pays $1200 per mo. in a high deductible policy. It is cheaper for this family to have a second home with a mortgage in a cheaper state for real estate and health insurance (Like Pennsylvania for example) and use this address as primary residence!!! Just get your health care needs done on Saturday
Basically a second home for free. :

Joking put aside thisf situation is kind of ridiculous.
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Re: The book, The New Health Insurance Solution
Old 05-13-2006, 12:05 PM   #10
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Re: The book, The New Health Insurance Solution

Speaking of solutions to healthcare expenses, here's a dental update from the front lines in Bangkok.* Spouse is there for a military exercise, and here's how it's going so far:
* * *"We had a great time at MBK [mall] yesterday.* After the blistering heat of ChinaTown, we decided to stick with shopping in A/C.* [Thai mother of coworker] is a shopper.* She came with a list and we powered thru all 6 stories of MBK.
* * *I got great Thai prices on more handicrafts stuff I don’t need. We also got foot massages and of course, mango sticky rice desserts.* Because [coworker's] mom was there to speak for me, we went to the cosmetic dentist in MBK and she and I had work done.* For 1000 baht ($25!), I got my two upper eye teeth laser whitened.* They lightened up about a shade and a half and I’m really pleased.
* * *[Coworker's] mom got 6200 baht worth of fillings, cleaning, and whitening.* While we got foot massages she got her eyebrows tatoo’d (no more using eyebrow pencil to fill them in).* Only 1500 baht."

Hmmm... spouse is getting more dental price quotes.* My local dentist announced last month that most of my fillings are well past their expected lifespan and that I shouldn't be surprised if they start dropping out of my mouth any day now.* He knows that I don't carry dental insurance, so of course he's standing by to render assistance!
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Re: The book, The New Health Insurance Solution
Old 05-13-2006, 07:56 PM   #11
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Re: The book, The New Health Insurance Solution

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Originally Posted by Nords
My local dentist announced last month that most of my fillings are well past their expected lifespan and that I shouldn't be surprised if they start dropping out of my mouth any day now. He knows that I don't carry dental insurance, so of course he's standing by to render assistance!
Time to plan subsidized overseas dental trips. Would a trip to Thailand for medical/dental by totally tax deductable?
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Re: The book, The New Health Insurance Solution
Old 05-13-2006, 11:20 PM   #12
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Re: The book, The New Health Insurance Solution

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Time to plan subsidized overseas dental trips. Would a trip to Thailand for medical/dental by totally tax deductable?
Oh, absolutely. So would the massages!
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Re: The book, The New Health Insurance Solution
Old 05-14-2006, 06:56 AM   #13
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Re: The book, The New Health Insurance Solution

Looking at the chart on the webpage it looks like many states have a guaranteed coverage option.

However, there is a cap. Here in NY the lifetime cap is $1 million. some states are higher. And Medicare is a gigantic mess so I am not depending on them to bail me out.

I look at medical bills all day (seven more weeks to go not that I am counting). One total Knee can go over $50,000, transplants several hundred thousand. Chemo and radiation can have several rounds and can be in the hundred thousands of dollar ranges. Pregnancy complications with a baby in ICU- again huge costs. What if your child (or you) needed heart surgery.

Yesterday I spent some time with my mid 80's in-laws. They are not particularily sick but they had a stack of medical bills they were dealing with. They were non drinkers, non smokers, exercisers and never much overweight so have no complications from those habits. One fell and fractured a hand, one sees a neurologist, both dermatologist. Every few months at the primary to check on the cholesterol/blood pressure/cardiac/arthritis meds. It can really add up.
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Re: The book, The New Health Insurance Solution
Old 05-14-2006, 07:31 AM   #14
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Re: The book, The New Health Insurance Solution

Martha, could you cut and paste your review over to Amazon.com? If I have an interest in a book, I ususally check the reviews there first, so your review would more accessible and likely to reach a larger audience. Thanks for taking the time to review the book.
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Re: The book, The New Health Insurance Solution
Old 05-14-2006, 10:45 AM   #15
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Re: The book, The New Health Insurance Solution

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Originally Posted by perinova
Prices higher for women? Would that be for younger women in age of having children? For what area?

One example is Iowa's risk pool, which is much more expensive for women.
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Re: The book, The New Health Insurance Solution
Old 05-14-2006, 10:45 AM   #16
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Re: The book, The New Health Insurance Solution

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Martha, could you cut and paste your review over to Amazon.com? If I have an interest in a book, I ususally check the reviews there first, so your review would more accessible and likely to reach a larger audience. Thanks for taking the time to review the book.
I did. My first Amazon review.
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Re: The book, The New Health Insurance Solution
Old 05-14-2006, 11:58 AM   #17
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Re: The book, The New Health Insurance Solution

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I did.* My first Amazon review.*
I think we're creating a monster here!
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Re: The book, The New Health Insurance Solution
Old 05-14-2006, 12:05 PM   #18
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Re: The book, The New Health Insurance Solution

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I think we're creating a monster here!

Bwaaa!

Nords, do you post your reviews on Amazon?
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Re: The book, The New Health Insurance Solution
Old 05-14-2006, 12:50 PM   #19
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Re: The book, The New Health Insurance Solution

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Nords, do you post your reviews on Amazon?*
Not yet, but IMHO you display all the same gotta-write symptoms that I wrestle with.

I've looked at Amazon book reviews & blogs but they just don't provide the same feedback as a BBS, I mean discussion board. Blogs feel too much like shouting from a rooftop, but to me a discussion board seems like a nice comfortable livingroom family argument chat. I enjoy the public exchanges that poke holes in my alleged logic or just make me consider a new perspective. It's getting to the point where even my spouse says "Well, what do the other ERs think?"

I can very easily see you & Greg spending your time on the road writing travel articles or legal-advice columns between destinations. When I look through a copy of "Writer's Market" I see free money for anyone who can string a few sentences together for an editor to wrap around magazine advertising or websites. I don't enjoy deadlines but I do enjoy crafting purposeful prose for a particular audience. And if you're thinking "Nah, that's not me", then you should start a PM conversation with ESRBob about Nolo's lawyer-authors.

The trick is enjoying your avocation without turning it into work or even (*gasp*) a job...
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Re: The book, The New Health Insurance Solution
Old 05-15-2006, 08:52 AM   #20
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Re: The book, The New Health Insurance Solution

Thanks, Martha for the info - and I appreciate you posting on Amazon, as I also look for input before purchasing a book (I'd probably be able to retire MUCH sooner if I borrowed from the library instead of adding to my copious piles of purchased books!!). I find that many of Mr. Pilzer's books have the same skew of facts - who was it that first noticed you could bend statistics to say whatever you wanted them to say
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