Other LBYMs squeezed out in H'care reform

[enfp]

Are there any other LBYMs who are worried about falling through the cracks in the healthcare reform legislation?

In the Senate Finance bill, which is coming up for a vote, anyone under 133% of poverty is excluded from the subsidy and forced to go on medicaid which likely will have to change its resource limits to accept people with assets.

Under HR 3200, if you have income less than 133% FPL you are assumed for subsidy purposes to be at 133% FPL.

We were not interested in taking the subsidy as we were satisfied with our high deductible policy for which we pay roughly 3k/yr in premiums. Based on the Kaiser Family Foundation calculator (kff.org) the cheapest “exchange” plan is going to cost us 10k/yr which would become 50% of our annual expenditures. We will not qualify for the subsidy if the Senate Finance bill passes. If we have to choose, we would much prefer to choose the subsidy over Medicaid.

We do not want to go on Medicaid which we’d have to do under the Senate Finance bill because we choose this LBYM ER lifestyle consciously. We have some assets but not enough to cover an additional 7k/yr for the next 20 years. We consider ourselves middle class even though we have no taxable income.

 

[Notmuchlonger]

Are there any other LBYMs who are worried about falling through the cracks in the healthcare reform legislation?

In the Senate Finance bill, which is coming up for a vote, anyone under 133% of poverty is excluded from the subsidy and forced to go on medicaid which likely will have to change its resource limits to accept people with assets.

Under HR 3200, if you have income less than 133% FPL you are assumed for subsidy purposes to be at 133% FPL.

We were not interested in taking the subsidy as we were satisfied with our high deductible policy for which we pay roughly 3k/yr in premiums. Based on the Kaiser Family Foundation calculator (kff.org) the cheapest “exchange” plan is going to cost us 10k/yr which would become 50% of our annual expenditures. We will not qualify for the subsidy if the Senate Finance bill passes. If we have to choose, we would much prefer to choose the subsidy over Medicaid.

We do not want to go on Medicaid which we’d have to do under the Senate Finance bill because we choose this LBYM ER lifestyle consciously. We have some assets but not enough to cover an additional 7k/yr for the next 20 years. We consider ourselves middle class even though we have no taxable income.

Yes, I'm worried this whole thing will cost us more. Im also worried you have no choice but to pay. Otherwise they will hunt you down and make you pay the penalty. Such is life comrade.

 

[ziggy29]

It's no different than anything else -- the rich can afford it, the poor get the subsidy, the middle class gets the shaft.

 

[W2R]

I am worried too, not for myself but for others that I know and for the public in general.

But as far as I can tell, nothing is a done deal at this stage. Nothing I can do seems to affect the outcome of this sort of thing, either. So, no point in stressing out until something definite comes out of this.

 

[growing_older]

I'm on hold, continuing to work but hopefully getting close to FIRE. I expect that's a small enough demographic that there will be no provision for my situation in the proposed plans and I will have to wait until this all passes or not to see how the landscape is changed. No way would I want to make a move like leaving employment or counting on being able to qualify for private health insurance when the rules are about to change, possibly unpredictably.

 

[Gone4Good]

Based on the Kaiser Family Foundation calculator (kff.org) the cheapest “exchange” plan is going to cost us 10k/yr

I'm not sure how they could possibly know this.

Besides, the footnote to the calculator says that other plans with lower benefits and costs may be available.

But I agree with the general sentiment. Healthy people who currently enjoy low cost health insurance in states where insurance companies are allowed to deny coverage will see their premiums go up, I fear. On the flip side, people with medical problems who can't get insurance at any price will be better off. As will some healthy people who become sick.

 

[DblDoc]

But I agree with the general sentiment. Healthy people who currently enjoy low cost health insurance in states where insurance companies are allowed to deny coverage will see their premiums go up, I fear. On the flip side, people with medical problems who can't get insurance at any price will be better off. As will some healthy people who become sick.

Kind of like insuring our cars. Wonder if there will be "healthy eating" discounts or increased premiums for smoking.

DD

 

[ziggy29]

Kind of like insuring our cars. Wonder if there will be "healthy eating" discounts or increased premiums for smoking.

If one follows that to the logical conclusion, should people living healthy lifestyles pay higher Social Security taxes or receive lower SS and/or public pension benefits because they cost the taxpayers more by living longer?

 

[Notmuchlonger]

If one follows that to the logical conclusion, should people living healthy lifestyles pay higher Social Security taxes or receive lower SS and/or public pension benefits because they cost the taxpayers more by living longer?

Guess you would need to analyze the cost benefits of people with poor habits vs the healthy people who suck up a few more years of benefits. Then divide by 42.

 

[Martha]

Kind of like insuring our cars. Wonder if there will be "healthy eating" discounts or increased premiums for smoking.

DD

Many risk pools have a higher rate for smoking.

 

[FIREd]

I am worried about healthcare too and I do not feel at all reassured by the proposals currently being discussed in Washington. I was a big proponent of healthcare reform but if they have to tax the heck out of my income, I demand nothing short of Medicare for all. If we really have to keep unregulated for-profit insurance companies around, then we might as well scrap any health reform proposal and maintain the status quo. The current proposal would just make the situation worse IMO, i.e. raise taxes and premiums for a lot of people. There I've said it.

 

[ziggy29]

If we really have to keep unregulated for-profit insurance companies around

Do you have an example of an unregulated for-profit insurance company?

You may think they are not regulated enough -- and that's a judgment call we have to all make for ourselves -- but they sure as heck aren't unregulated.

IMO, the fallacy with this is the assumption is that elimination of the profit motive will guarantee that government can do it cheaper. Maybe they can, maybe they can't, but if experience in other areas is any indication (look at parcel delivery, USPS versus UPS or FedEx), if government-provided services have a higher cost structure than the private "for profit" sector (wages, benefits, waste), some or all of the "non-profit discount" could vanish -- and possibly even be more expensive than for-profit businesses that have to keep overhead costs down to be more competitive and responsive to shareholders.

 

[FIREd]

Do you have an example of an unregulated for-profit insurance company?

You may think they are not regulated enough -- and that's a judgment call we have to all make for ourselves -- but they sure as heck aren't unregulated.

IMO, the fallacy with this is the assumption is that elimination of the profit motive will guarantee that government can do it cheaper. Maybe they can, maybe they can't, but if experience in other areas is any indication (look at parcel delivery, USPS versus UPS or FedEx), if government-provided services have a higher cost structure than the private "for profit" sector (wages, benefits, waste), some or all of the "non-profit discount" could vanish -- and possibly even be more expensive than for-profit businesses that have to keep overhead costs down to be more competitive and responsive to shareholders.

Yes I meant not regulated enough. I knew that word was going to draw fire and I should have changed it when I still had a chance but I couldn't think of a better word so there...

About that fallacy of mine, IIRC the US government provides medical care to all seniors via Medicare with much lower overheads than for-profit insurance companies can. Last time I checked, seniors weren't exactly unhappy with their socialized medicine. If it's good enough for the old folks, why isn't it good enough for all of us? Sure, Medicare currently underpays for service rendered (some would say that private insurance subsidizes Medicare) but, even when adjusting for that, it has to be a lot cheaper than what we have now. Each dollar of profit insurance companies make has to come from somewhere. That's one dollar more you have to pay or one less dollar you receive in medical care. That represents a huge inefficieny and markup in the system IMO.

Every other developed country on earth provide medical care to everyone at a much lower cost than we can and we cover only a fraction of the population. So what gives? How come the most powerful and richest country on earth cannot provide what every other developed country on earth can? For-profit healthcare has a lot to do with it.

 

[FUEGO]

OP, your concern doesn't apply to me I don't think. We are a ways from FIRE, but I doubt I could secure a $3k/yr policy for our family, and I doubt I could keep it at $3k/yr were someone to actually need it due to serious illness.

Assuming the final bill has no asset test (a la medicaid), we will probably be much better off with guaranteed coverage at some level and a big subsidy due to planned low taxable income levels. And as far as planning and budgeting, the government plan would probably be more stable year to year versus a private plan that could double or triple were one of us to get really ill, or otherwise become ineligible and have to go to a high risk pool.

 

[samclem]

I hope they post the bill this time before the vote. 72 hours online to allow public review and comment was the promise, but that wasn't kept with the stimulus bill.

Each dollar of profit insurance companies make has to come from somewhere. That's one dollar more you have to pay or one less dollar you receive in medical care.

Let's see-- So we're asked to decide between extra cost due to insurance company profits or extra cost that will result from government inefficiency. If you are trying to convince folks of the benefits of government-run health care, I think you'll need different argument.

There are many areas where the present system could be improved. As far as cost--we don't have high costs because there is private insurance, but because the market is incredibly inefficent due to present legislation (a tax code that fosters a link between health care and employment, mandatory inclusion of items in insurance policies that customers might choose to not have if given the option, etc).

 

[ziggy29]

Each dollar of profit insurance companies make has to come from somewhere. That's one dollar more you have to pay or one less dollar you receive in medical care. That represents a huge inefficieny and markup in the system IMO.

Yes, assuming the government exactly maintained the existing cost structure of the private insurers. But they wouldn't -- suddenly the people working in it would be government employees with lavish benefits and job security that the private sector can't compete with. There might be more unionization and the added pressure on labor costs that produces. And the lack of a profit motive and the ability to just raise taxes instead of cut costs makes me less than convinced the government-run option would be cheaper.

Again, if the profit motive directly led to higher costs, why on earth would so many services cost more with the USPS than FedEx or UPS? Could it be that FedEx and UPS manage costs more effectively because of competitive pressures AND the need to show shareholders a profit?

Don't forget that the profit motive not only encourages private business to raise top-line revenue, but to ALSO reduce costs. Private industry doesn't have pricing power akin to the government's power to raise taxes. So they *have* to become more efficient -- "leaner and meaner," if you will. That's the great thing about competition.

When you add it up, I'm just not convinced that a government agency with government employees, government benefits and government's general disdain for cost-cutting would be cheaper than private industry, even after allowing for a reasonable profit.

 

[M Paquette]

Hmm... Playing with the calculator at Health Reform Subsidy Calculator -- Premium Assistance for Coverage in Exchanges/Gateways I get an annual cost between 21,187 and 19,014, which probably won't be subsidized (depending on how I want to tailor my income...)

That sounds expensive, but I was already looking at 15,000-21,000 a year once my extended COBRA coverage runs out to do a 'conversion', a move to insurance that wouldn't have pre-existing condition riders and that I couldn't be turned down for.

(I've posted on other threads about being turned down for high deductible plans and such that I would have preferred. It looks like we'll be buying insurance instead of a vacation home.)

 

[ziggy29]

Hmm... Playing with the calculator at Health Reform Subsidy Calculator -- Premium Assistance for Coverage in Exchanges/Gateways I get an annual cost between 21,187 and 19,014, which probably won't be subsidized (depending on how I want to tailor my income...)

Wow -- I'm playing with this calculator and putting in various income amounts, and these are looking like serious incentives to get off the hamster wheel and relax on a lower income.

For a family of 4 in a medium-cost area, the Baucus plan (as one example) gives a subsidy of $6,499 on a $50,000 income at my age (44). At $80,000 the subsidy is $1,068.

So by gaining $30,000 of added income, you lose $5,431 in subsidy. That's essentially equivalent to an extra 18% tax on every dollar you earn above $50,000 -- above and beyond all existing taxes!

Get me off this hamster wheel!

 

[FIREd]

If you are trying to convince folks of the benefits of government-run health care, I think you'll need different argument.

LOL, people are so retrenched on this subject that I would not expect to convince anyone. But I pay more than $100K in income and Medicare taxes a year (on an income earned from for-profit healthcare by the way) and, once in a while, I pretend to have a say about how that tax money should be spent. If my taxes have to go higher because of some heathcare reform bill, I'd rather fund Medicare for all than line up the pockets of some CEO with government subsidies provided by my tax dollars. I see much less waste in Medicare. But that's my opinion.

 

[FIREd]

Don't forget that the profit motive not only encourages private business to raise top-line revenue, but to ALSO reduce costs. Private industry doesn't have pricing power akin to the government's power to raise taxes. So they *have* to become more efficient -- "leaner and meaner," if you will. That's the great thing about competition.

But what good do you do by cutting costs if you don't pass those cost cuts to the consumer? Yes, it makes the corporation more profitable, but it doesn't lower cost for us. Profits for health insurers have exploded in the past 10 years, yet premiums keep outpacing inflation. The insurers might have cut costs during the time to boost their bottom line, but have you personally benefited from those cut cutting measures? I know I didn't (well except as a share holder that is).

 

[ziggy29]

I'd rather fund Medicare for all than line up the pockets of some CEO with government subsidies provided by my tax dollars. I see much less waste in Medicare. But that's my opinion.

Medicare reimbursement rates are very low compared to other patients. Many doctors won't even take new Medicare patients. If everyone paid Medicare's rates, I suspect we'd see a lot of doctors FIREing.

 

[Shawn]

When you add it up, I'm just not convinced that a government agency with government employees, government benefits and government's general disdain for cost-cutting would be cheaper than private industry, even after allowing for a reasonable profit.

Although I'm not a government employee, I work at a government organization. Last year, my cost was 3.82 times more than my actual salary. In other words, for every one of me who is supposed to be doing real work, there are 3.82 others on overhead accounts doing who knows what. Worse, my efficiency is fairly low due to the regulations that must be followed. At best, I'm probably "50% efficient." I have no reason to believe it will be any different with health care. So no, I don't trust the government's ability to control costs in health care or anything else.

 

[FUEGO]

Wow -- I'm playing with this calculator and putting in various income amounts, and these are looking like serious incentives to get off the hamster wheel and relax on a lower income.

For a family of 4 in a medium-cost area, the Baucus plan (as one example) gives a subsidy of $6,499 on a $50,000 income at my age (44). At $80,000 the subsidy is $1,068.

So by gaining $30,000 of added income, you lose $5,431 in subsidy. That's essentially equivalent to an extra 18% tax on every dollar you earn above $50,000 -- above and beyond all existing taxes!

Get me off this hamster wheel!

I have considered the same thing. This adds an extra layer of progressive taxation. Marginal rates shoot up quickly. If the loss of health insurance credits is an effective 18% marginal tax rate, and I am hit by 15% fed income tax and 7% state income tax, plus 8% SS/Medicare tax, as a worker I'm facing a 48% marginal tax rate, as a FIREe, I am facing a 40% marginal tax rate. Those are some pretty strong disincentives to earning income, especially at relatively low income levels.

Roth IRA's, municipal bonds, paying off the mortgage, and learning to live on a lower income may be good strategies under this new effective taxation scheme. High marginal taxation rates would also make part time earned income more attractive since it could be sheltered (ie you would consume your after tax savings and add to tax favored savings without necessarily realizing any income).

Ultimately it is all guesswork as to what the ultimate plan will look like and the specifics of the plan. All I know is that I'll be sharpenin the ole "cheat da gobmint outta der money" pencil once whatever plan comes to fruition.

 

[FIREd]

Medicare reimbursement rates are very low compared to other patients. Many doctors won't even take new Medicare patients. If everyone paid Medicare's rates, I suspect we'd see a lot of doctors FIREing.

As I said in my first post, those Medicare reimbursement rates would have to go higher. With medicare for all, doctors wouldn't be able to refuse Medicare patients because they'd go out of business. But I agree, Medicare for all would take a chunk out of doctor's income... and mine... which ironically would delay FIRE. Everyone seems to be looking for a solution which won't require any sacrifice on their part. It's ludicrous.

 

[FIREd]

Although I'm not a government employee, I work at a government organization. Last year, my cost was 3.82 times more than my actual salary. In other words, for every one of me who is supposed to be doing real work, there are 3.82 others on overhead accounts doing who knows what. Worse, my efficiency is fairly low due to the regulations that must be followed. At best, I'm probably "50% efficient." I have no reason to believe it will be any different with health care. So no, I don't trust the government's ability to control costs in health care or anything else.

Wow, now I am really ticked off. My taxes go to pay for some lazy people's salary, pensions and benefits. Now I am depressed. Perhaps the US can't pull it off after all.