The cost of health insurance

[Mr._johngalt]

Well, area52, I think we are mostly in agreement with
how things are functioning now. Our areas of
disagreement appear to be in how it should work and how to fix it. My politics are quite radical (closest
label would be Libertarian) and I have no confidence in
either major party to slow our slippery slope to socialism. I have watched it my whole life and it was
a significant factor in my decision to retire. If you are
familiar with my fictional doppelganger (John Galt),
you will have a solid grasp of my views. Anyway,
read some Orwell or Ayn Rand. They saw it coming.

 

[Michael]

area 52 quoted Adam Smith:

"People of the same trade...raise prices."

Mike replies:

You have a point about the limited competition in medicine. Adam Smith also wrote, "The monopolists, by keeping the market constantly understocked, by never fully supplying the effectual demand, sell their commodities much above the natural price..."

The AMA has convinced Congress to give MDs a de jure monopoly on myriad medical practices, and virtually all prescription drugs. The AMA et al then limits the number of doctors by limiting medical school enrollments, and driving the cost of medical education past the point where many can afford it. There is no true competition under these circumstances. Even the few trades, such as pharmacist or psychologist, that permit the practitioner to prescribe real medicine require a Ph.D. as a minimum entry point to prescribe. This forces people to go to the high priced few people who meet the legal requirements for even the most minor condition. If they cannot afford the prices, they simply have to do without under this system. They resort to herbs and folk medicine in desperation.

Removing the income tax on these professionals would lower their costs, some of which insurance companies would demand be passed on to them. To make medicine really affordable, however, we would have to introduce genuine unlimited competition in the field. This is about as unlikely as the removal of the taxes on medicine, because the special interest groups are far too powerful. Plan on increasingly expensive health insurance premiums in the future.

 

[1HappyFool]

The AMA has convinced Congress to give MDs a de jure monopoly on myriad medical practices, and virtually all prescription drugs.  The AMA et al then limits the number of doctors by limiting medical school enrollments, and driving the cost of medical education past the point where many can afford it.  There is no true competition under these circumstances.  Even the few trades, such as pharmacist or psychologist, that permit the practitioner to prescribe real medicine require a Ph.D. as a minimum entry point to prescribe.  This forces people to go to the high priced few people who meet the legal requirements for even the most minor condition.  If they cannot afford the prices, they simply have to do without under this system.  They resort to herbs and folk medicine in desperation.

This has been somewhat mitigated by the introduction of Physician's Assistants and the immigration of foreign doctors and US graduates of foreign medical schools. Immigrants from English speaking countries are obviously favored on the exams rightly required for accreditation, but it has the effect of draining the best and brightest from around the world.

A doctor who posts on TMF/REHP by the screen name of JLC claims the greatest deterrent to more US graduates is both the high cost and the insane hours required in residency programs. IOW, there is no suitable slow track for getting an MD while financing the education by working in the field.

It seems to me that there are opportunities for the school of engineering to add some competition to the school of medicine, but it would require some serious federal money to produce an AI that could prescribe drugs. Picture using PA's to input symptoms and recommendations to an AI and the AI could approve treatment and issue prescriptions. Military and VA doctors could fill the knowledge base and federally funded medicare centers using "autodocs" could be the kind of solution required to light a fire under the AMA to become more competitive. Depriving doctors of medicare and medicaid patients might be an acceptable level of socialized medicine, if only the feds could be trusted to do it efficiently.

1HF

 

[Ted]

The restrictions on becoming licensed as a physician have the advantage of insuring a certain minimum level of skill, even though they drive up the price of those services. As in the case of occupations that are "unionized," the consumer gets a generally better product, but at a higher price. Despite this, one hears plenty of people complain about alleged mistakes by their doctors, so I'd be cautious about lowering the standards for M.D.'s to the extent that more people, who would presumably be less intelligent and/or motivated, could also practice medicine at the highest level.

The best prospect for controlling the cost of medical care, while continuing to improve its quality, is through greater use of healthcare personnel with lower levels of training/skill than M.D.s. In fact, that is the function that nurses have long performed. Changing their title to something like "medical practitioners" would help to dispel the streotype that this field is limited to women (who are the only ones who can "nurse" according to the original meaning of the word.)

There is, of course, inevitible controversy as to the appropriate "dividing line" between the responsibilities of M.D.s and nurses. Some of this is legitimate concern for insuring appropriate skill levels, and some is protection of market (monopoly) power.

My wife is an administrator in a hospital, and has observed the same sort of behavior on the part of nurses (who are unionized there) resisting efforts to transfer some of their traditional functions (like helping patients to the toilet) to lower skilled, lower paid personnel. Hospitals keep very extensive statistical records regarding patient outcomes, and many changes to traditional healthcare procedures can be monitored to determine whether any statistically significant change in patient outcomes occurs.

Another aspect to this issue is that many of the lower skilled people who could potentially be used more extensively (and who would eventually become more highly skilled and more highly paid as the result) are minorities. So it is in their interest as well as in the economic interest of patients/taxpayers that their skills be developed and utilized, in a way short of sending them all to nursing or medical school.

 

[Mr._johngalt]

What I would really like is some affordable
catasthropic health insurance with a large
(up to $20,000) annual deductible. Can't locate so far,
although I am pretty sure someone must be in this
business. Vicki Terhorst told me she had heard of an
English company that was into underwriting something
like this. Alas, she had no details. Can anyone out there help ?? Thanks.

 

[Mr._johngalt]

Does anyone know someone who has arranged their
finances (offshore?) in order to put their assets out of reach of creditors?? I do not refer to scams or any kind of fraud.
However, if you knew that in a worst case scenario
your base would be protected, it could alter your
whole view of how to manage risk.

Thanks.

 

[Michael]

I may be mistaken, but it is my understanding that the type of overseas policy that you are talking about covers you anywhere in the world, except the United States. For the most part, we are pretty much limited to purchasing health insurance that covers us in the US from companies licenced to sell insurance by the state that we live in.

 

[dory36]

I used a company for a while when I first retired, at http://www.escapees.com/website/support/escape.html -- they offer catastropic coverage.

Dory36

 

[Mr._johngalt]

How about the health insurance offered through AARP?
Has anyone tried that? Results?

Thanks!

 

[Telly]

Has the AARP added real health insurance? I checked their web site some time ago, and only saw Medicare Supplementary, etc.

About a year or so ago Consumer Reports had an article on private health insurance, with rates for different companies in many states. They had various subject scenarios that they insured. Rates in Florida were real high for some of the companies. Probably too many old people there...

One of CR conclusions was to consider BCBS in your state. But BCBS can get very restrictive on who they will accept, they have been rigid on BMI (Body Mass Index) as a pre-filter. If you or a covered family member has a BMI of 30 or over, forget it. It is an automatic dump from their consideration.

A common practice of insurers is also to not cover any pre-existing condition. And their definition of pre-existing can be anything they see in a person's past, whether it is an active problem, or something well past and done with. They will say no coverage for any X problem for the next Y years. It is the choice of their underwriters to accept or opt out of anything they want. The more they opt out of for X years, the lower their $ risk is. Of course, the insured does not get any break on the premium amounts for anything the underwriters put on pre-existing opt out.

 

[Mr._johngalt]

Yes, AARP has health insurance now and it might be
"new". At least the literature I received said so.
They make it a point to say that it is not "major
medical" but may work as a "bridge" until
Medicare kicks in. I think if you had a health
disaster you would still be in trouble.. What I liked
was the info was quite understandable and clear, the application simple,
and the possible cost (various classes/limits)
was well explained. We checked into insurance in
Fla. and Texas, our 2 ultimate preferred locations.
I thought the cost was quite high in both states.
We did find much lower costs in some northern states.
However, as my wife said, that would be "going
backward". Thus we are sticking with our first
choices and struggling with the health insurance
conundrum.

 

[Telly]

Insurance Premiums are also affected by whether you live in a rural area, or in or within reasonable distance from an urban center. Can be much higher in the urban. I don't know if that is because of pricing of health care costs (what the market will bear), or because of more "procedures" available in a city. Maybe the costs are lower rural, because a person may just die, instead of being rushed by Paramedics to a full-featured hospital where they will be kept "alive" with tubes and whatnot till their insurance runs out!?

Sorry, I know that's not nice, but health care IS a big business, and in the end we are all just, well........ meat!

Selecting coverage is tricky too. I know I had a tendency to think "hey, I'm in great shape, I just need the minimum of insurance". But I'm not the only one to cover. And if/when something does happen to one of us, it will be too late to try to get more coverage. A sick person trying to get health insurance on their own is like a leper in the insurance world.

I hope I'm not scaring anyone away from considering Early Retirement. But I see health insurance as the biggest unknown to try to get a handle on. We all like to talk about investing, and much info on that is available, both good and bad. But even Consumer Reports didn't come up with much of a solution for private medical insurance.

 

[RYD]

Though I am not retired and I have excellent coverage due to my employer I have been giving thought to this issue. When the day comes and I do retire my general plan is to 1. start a small consulting business that would allow me to buy group insurance. I have a unique situation in my industry that would allow me to do this if I choose to. I do not plan on working the hours I do today or travel nearly as much but be involved enough to coverage costs and do engagments I enjoy. The other option would be to get a part time position that had coverage. I admit that neither of these qualify as full time retirement but one needs to be practical on an issue as serious as medical coverage.

 

[Mr._johngalt]

I have options for less expensive health insurance,
as I still own my own company. We used to manufacture products, but since my retirement it is
a holding company only, although it still requires a
little time. Anyway, the corporation is based in another state. To use this option I would have to relocate to
the state where my company is based. I could do it,
but it is not my first choice. As someone else said,
I may be forced back if health insurance is not
obtainable, or too costly. Jury is still out..................

 

[Mr._johngalt]

And another thing.......................I agree with Telly.
For me. health insurance has been the number One
problem in my ER life. Nothing else is even close in terms of continuous worry and hassle.

 

[newellcr]

Good discussion, but post details pls

Hello Folks,

Good thread! Would some early retirees please post your health insurance costs? I saw a couple of posts early, but had a tough time following details. I saw $7400yr, $4800/yr, $480/mo, etc. Are these me or we numbers? I hope to retire before my kid(s) are 18 and may need a family policy or maybe my wife will work til 52 and will get her teacher benifits in a non-early retirement. (She says that's how long she wants to work, don't beat me up... My suggestion is to beat feet earlier )

What's "high deductable"? A few posts with more details would really help. Please and thank you!

Kind Regards,

Chris

 

[Michael]

High deductible means you pay all medical costs out of your own assets until the deductible is met, for example around $2500 per year. After that, the insurance company pays most of the tab. If you opt for a Blue Cross PPO, the doctors in the network will only charge you the negotiated rate for services until the deductible is met. The annual cost of the policy will depend entirely upon your family's health status when you apply. It can range from approximately $150/month or so per person (450 for a family of 3), to thousands of dollars per person. If you go high deductible, make sure that you can pay the deductible out of your own assets every year until you are 65. Once someone gets sick, you will not be able to change over to a low deductible policy, as you will then be uninsurable.

If your wife is close to her 30 years, it may indeed make sense to wait. Health care is going up much faster than the rate of inflation.

 

[Mr._johngalt]

For me "high deductible" has always meant around $5000 to $10,000 a year. Figured I could stand that and if something really bad happened, I would be dead and so health insurance would be a non-issue. I had 2
things occur which caused me no end of grief.
First, I switched companies/plans for various reasons
several times since I ERed. At the same time, I was
developing some chronic health problems which
(while not terminal nor very expensive to treat)
scared off some insurance companies and/or drove up
premiums severely in the plans which were still
available. Don't think my premiums currently would be of interest
for the coverage we have as the coverage is
quite non-traditional. We like it so far, but it is
new. We'll see if it stands the test of time. BTW, I was
quoted premiums for some insurance which exceeded
my total annaul income.

 

[dory36]

We have seen $2000 deductible rates for a healthy couple in our early 50s run in the $3800-5000 range.

We've switched a few times, as every company has raised the rates by 20% or so at the first anniversary, even though we've made no claims.

Dory36

 

[newellcr]

Mike, John, and Dory36,

Thanks for the replies. I have always wondered about covering my own health insurance. Folks say it's expensive - I don't know how much "expensive" is but I know how much $5k is . "Expensive" and "high" are relative terms, opinions, if you will. These words don't always translate to other folks. It means so much more when numbers are also applied.

We're probably 15 years away from our comfort goal which gets us pretty close to her 30 and out numbers.

Thanks again,

Chris

 

[JWR1945]

For newellcr:

Consider Federal employment toward the end of your career. Federal Retirees get exactly the same health insurance benefits as active employees. The Government continues to pay its part of the bill and that part is getting bigger and bigger.

This is not necessarily the best solution for you. But it is a major league benefit for those of us who can make use of it.

Have fun.

John R.