Healthcare reform - a wave of early retirees?

[ERD50]

.... should cost a little more than our per capital health care spending (less any government subsidies).

I understand your point, but I just can't let it go that the part that is subsidized is not a "cost". That "subsidy" gets paid out of our taxes (or our kids/grandkids taxes plus interest).

Since most of the people on this forum are taxpayers, those subsidies will likely "cost" us the most.

-ERD50

 

[Stevewc]

Steve, you might want to talk to an independent agent to see what your options are for a lower cost plan. You might find a far better deal if you are healthy than the employer subsidized risk pool. Also, I see that the Alabama BCBS plan has lifetime limits of a million dollars. Not horrible, but not the best. There is a managed care option which doesn't have that limit. http://www.healthinsuranceinfo.net/statecoverageguides/AlabamaHealthInsuranceGuide.pdf


Or it is trying to help those who can't afford to buy the expensive insurance and are not eligible for the cheaper plan. Maybe better than having people who are unhealthy running the employer's costs up.

Thanks Martha,
I hadn't noticed the limits on these policies. I guess my main shock was sticker prices .
The link was insightful also.
I was just thinking (dangerous-I know ) I haven't seen or heard anything about protecting or securing benefits for people 55 yrs and older from the talking heads this time around. I think AARP is still in the negotiations and meetings though.
One thing I've learned, Legislation has a way of getting your hopes up, just to let you down in the end. So I'm watching, waiting and hoping for the best.
Steve

 

[Stevewc]

Blue Cross & AHIP are very concerned about the reform movement.
It just might be a good thing for all to keep them on the ropes.
Their concern to stay in business will wake them up and shake them up.
Sometimes I think the Public Plan could be a tactic to push BCBS & others to find ways to lower prices and treat folks more fairly. You work your whole life, pay into insurance, then you retiree (or try to). All of a sudden your a high risk pool person (over night) and they cherry pick and don't need you any longer. Or basically want to charge you double.
Why is it that 100 people working for mega corp gets a group policy price break? But 100 individuals working for themselves or even retired don't. While I'm at it, why is the sky blue ? Do you think Blue Cross had anything to do with that ?
My $.02 worth,
Steve

 

[huusom]

Why is it that 100 people working for mega corp gets a group policy price break? But 100 individuals working for themselves or even retired don't. While I'm at it, why is the sky blue ? Do you think Blue Cross had anything to do with that ?
My $.02 worth,
Steve

The group pricing is just an excuse for the ins companies to rip us off. There is no real justification for it. I'm sure that most of ins cos will always have at least 5000 individual policy holders but these policy holders pay a higher rate than a group rate of 100. All they need to do is to classify the individual policy as a group and give them the 5000s group rate.

Make sense?

 

[ziggy29]

Why is it that 100 people working for mega corp gets a group policy price break? But 100 individuals working for themselves or even retired don't.

Probably for the same reason why people can often get price breaks when they buy in bulk/wholesale quantities. And why a business that wants to buy a fleet of 50 new vehicles is likely to drive a better bargain than an individual looking to buy one vehicle.

With a customer willing to deal in high volume, the seller of the product doesn't need as high a margin per unit to make the sale profitable. Hence the "volume discount." It's hardly the exclusive province of health insurers.

Sucks for the individual buyers, but there IS a business reason for it. It's not something they do with the express purpose of screwing the little guy.

 

[jug]

Just a thought.

After about 30 or years on a job, the average person has had it, unless of course they are on top of the food chain pyramid.

It's best to give those who want to get out some sort of incentive insurance wise as to make room for the next generation of workers, who work cheaper, who are trying to kick start their lives in a system with shrinking opportunities.

An incentive can actually pay for itself, saving on lower labor costs can be used to subsidize insurance for older dropouts, win win for those burned out, and those fresh enough to get on the "dreadmill".

On another note, as time goes on, if the US/Europe cannot pull another rabbit out their hats, unemployment may very well rise significantly due to many jobs being taken over by technology. This is why a system has to be developed to free the older workers from their chains (insurance) to let in the younger. Shortage of work IMHO is inevitable.

jug

 

[huusom]

Probably for the same reason why people can often get price breaks when they buy in bulk/wholesale quantities. And why a business that wants to buy a fleet of 50 new vehicles is likely to drive a better bargain than an individual looking to buy one vehicle.

With a customer willing to deal in high volume, the seller of the product doesn't need as high a margin per unit to make the sale profitable. Hence the "volume discount." It's hardly the exclusive province of health insurers.

Sucks for the individual buyers, but there IS a business reason for it. It's not something they do with the express purpose of screwing the little guy.

Actually, the difference here is the fact that a bulk purchase is usually a one time or occasional deal. Sellers are often in need of clearing out their inventories so they offer incentive for bulk purchases. Health insurance is an on going deal. They will always get the same monthly payment from the 5000 individuals and 100 group rate employees.

That's why an insurance exchange makes sense.

 

[ziggy29]

After about 30 or years on a job, the average person has had it, unless of course they are on top of the food chain pyramid.

It's best to give those who want to get out some sort of incentive insurance wise as to make room for the next generation of workers, who work cheaper, who are trying to kick start their lives in a system with shrinking opportunities.

Well, as I've said before, some people think this was the real (mostly unstated) goal behind Social Security -- reduce the number of people who *need* to work, and you reduce the social problems of unemployment. You may create other issues along the way, but you presumably free up some jobs as people who no longer need to work start to retire.

Some suggest the same for health care reform -- provide the "separation of employer and health insurance" and perhaps it will be easier for people who are only working for the health insurance to retire and create job openings for the currently unemployed. Whether or not that creates additional problems elsewhere remains to be seen.

 

[ziggy29]

Actually, the difference here is the fact that a bulk purchase is usually a one time or occasional deal. Sellers are often in need of clearing out their inventories so they offer incentive for bulk purchases. Health insurance is an on going deal. They will always get the same monthly payment from the 5000 individuals and 100 group rate employees.

Yes, but from a *sales* standpoint, the cost of sales and servicing of accounts is much greater for billing and selling to 1000 individuals than to one group plan sponsor for 1,000 employees. So even if the premiums collected were the same, overhead costs associated with 1000 smaller accounts are much greater than for one very large account.

If anything, from a cost containment perspective, then, "one huge group" would IN THEORY be the most efficient, but could cause other side-effects, the extent to which they'd hurt is unknown.

 

[jug]

Some suggest the same for health care reform -- provide the "separation of employer and health insurance" and perhaps it will be easier for people who are only working for the health insurance to retire and create job openings for the currently unemployed. Whether or not that creates additional problems elsewhere remains to be seen.

It's best to have an older population idle than a younger one. Look at Iran, very young, if the young had more opportunity, had more employment and were busy most of the day working, the country would not have the unrest it has today.

When you are young, and working, making a few bucks, expending energy, coming home tired, looking foward to a game on TV, you could care less who runs the government, as long as you have your 3 squares and a half decent life.

Don't think this cannot happen in our society. My son is a new teacher in the NYC board of Ed. Almost got layed off due to budget problems. Now if those entitled to their full pensions after 30 years would simply opt out, the young would then have their crack at the pie. Keeping him idle is not a good thing, especially if you multiply it by the millions.

jug

 

[huusom]

Yes, but from a *sales* standpoint, the cost of sales and servicing of accounts is much greater for billing and selling to 1000 individuals than to one group plan sponsor for 1,000 employees. So even if the premiums collected were the same, overhead costs associated with 1000 smaller accounts are much greater than for one very large account.

If anything, from a cost containment perspective, then, "one huge group" would IN THEORY be the most efficient, but could cause other side-effects, the extent to which they'd hurt is unknown.

Fair enough, but with today technologies such as auto-debit the collecting process is virtually minimum. I'm sure extra charges can be imposed if individual don't want to participate in these cost saving programs. As for marketing costs, I buy my auto insurance from 21st Century. They don't do much marketing. No sales staffs needed and it translated to lower premium to me.

 

[jug]

Another thought comes to mind with our health care system.

In order to cover more people uninsured, use the current private pay system, but expand coverage to extended family members who do not have coverage.

For example, if one still has stay at home kids who are kicked out of the system due to age, 24 I believe if in school, 19 if not, then as members of the household or extended family, they should remain covered. The risk is actually not that big for insurers, since they are young. That would cut down on many "uninsureds" mentioned in the stats.

What you have left would then be the out of work, who could latch on to extended family member plans, the working uninsured, who could do the same.

The system of last resort would then be a government group policy if no extended family exists.

jug

 

[Stevewc]

Another thought comes to mind with our health care system.

In order to cover more people uninsured, use the current private pay system, but expand coverage to extended family members who do not have coverage.

For example, if one still has stay at home kids who are kicked out of the system due to age, 24 I believe if in school, 19 if not, then as members of the household or extended family, they should remain covered. The risk is actually not that big for insurers, since they are young. That would cut down on many "uninsured" mentioned in the stats.

What you have left would then be the out of work, who could latch on to extended family member plans, the working uninsured, who could do the same.

The system of last resort would then be a government group policy if no extended family exists.

jug

Jug,
In my group plan at work (BCBS) they have already extended coverage to young adults still living with parents even if they are not students. I was surprised when I got the memo at work about this. I think it was in 2008 before the market started tanking.
Anyway things seem to be headed in the direction you are thinking about.
Steve

 

[Rustic23]

I know nothing about how insurance companies decide on group and individual rates. However, that makes me an expert! Could it be that the insurance co. knows the scope of the group, age, health, job dangers and such and therefore can offer the group a rate based on the make up of the group. I would think a group with 75% under age 30 would get a rate less than a group75% over 30. These stats are available to them. Now the 5,000 individual group may have a far different make up and therefore require the individual rates to cover the group. Just a thought.

 

[ERD50]

Why is it that 100 people working for mega corp gets a group policy price break? But 100 individuals working for themselves or even retired don't.

Steve

The group pricing is just an excuse for the ins companies to rip us off. There is no real justification for it.

Probably for the same reason why people can often get price breaks when they buy in bulk/wholesale quantities.

There *is* a reason, and it is far more than the bulk quantity deal. It has been discussed on the forum before - the total pool, versus a self-selected group.

When an ins co does a group deal with a large-corp, they are covering *every* employee - you can't op-out, just because you think you are healthy, and you can't opt-in if you sense you are becoming ill, and previous conditions are normally not covered (or not covered for a year), to prevent job-hopping for the ins. You are in, period.

Now, compare that to 100 individuals, self-employed. Some will choose to skip it (generally the healthy ones), but the sick ones will want to buy coverage - so you no longer have a general pool, you have a self-selected group that is higher risk than a general pool, and the ins cos have to charge accordingly (or go out of business and get a bail-out).

This is why many of us see that any govt ins system will need to have everyone in the system and spread the risk, or prices will stay high for those who want ins. I doubt Congress can get that far in the thought process.

I know that ins cos seem to pull dirty tricks from time to time, but this isn't one of them - they have to charge that way.

-ERD50

 

[lets-retire]

Here's a thought start, a company or non-profit set up solely to provide group health insurance. We had one that provided health insurance to small cities at my last agency. The cost was a bit high, but we had a very good policy.

 

[Gone4Good]

I understand your point, but I just can't let it go that the part that is subsidized is not a "cost". That "subsidy" gets paid out of our taxes (or our kids/grandkids taxes plus interest).

Since most of the people on this forum are taxpayers, those subsidies will likely "cost" us the most.

-ERD50

Yeah, yeah, yeah . . . I get it, no such thing as a free lunch. But from a personal perspective its probably more appropriate to look at it as two separate things 1) an individual's direct cost of health insurance and 2) an individual's direct cost of government. The two may vary widely depending on who you are.

But I wouldn't jump to the conclusion that retirees are necessarily the ones who are going to be shouldering most of the tax burden. The current tax code grossly favors wealth over labor. Consider two married couples: Couple A works and earns $80K per year. Couple B has a portfolio that generates $40K in normal interest and $40K in qualified dividends. Couple A will pay $7,560 in federal income taxes and an additional $6,120 in payroll taxes, for a total of $13,680. Couple B pays only $2,360 in federal income taxes (and has the luxury of moving to a state with no income tax). So the working couple pays nearly six times as much in taxes as the couple resting on their wallets.

 

[ERD50]

Here's a thought start, a company or non-profit set up solely to provide group health insurance. We had one that provided health insurance to small cities at my last agency. The cost was a bit high, but we had a very good policy.

I've pondered that too. Kind of like a Credit Union, or a food co-op. They don't have to make a profit, just pool and spread the risk. I suspect that there are so many complex regulations that the "barriers to entry" are too high?

Yeah, yeah, yeah . . . I get it, no such thing as a free lunch. But from a personal perspective its probably more appropriate to look at it as two separate things 1) an individual's direct cost of health insurance and 2) an individual's direct cost of government. The two may vary widely depending on who you are.

But I wouldn't jump to the conclusion that retirees are necessarily the ones who are going to be shouldering most of the tax burden. The current tax code grossly favors wealth over labor. Consider two married couples: Couple A works and earns $80K per year. Couple B has a portfolio that generates $40K in normal interest and $40K in qualified dividends. Couple A will pay $7,560 in federal income taxes and an additional $6,120 in payroll taxes, for a total of $13,680. Couple B pays only $2,360 in federal income taxes (and has the luxury of moving to a state with no income tax). So the working couple pays nearly six times as much in taxes as the couple resting on their wallets.

I wonder how many on the forum get half their income stream in qualified dividends? I sure don't. Isn't 80K = 80K tax-wise if it isn't in munis or other specially treated classes? And not being "earned income" shuts the door on other benefits (IRAs).

And that is today - I'm not so sure that wealth isn't going to be taxed more and more (let's not forget the 55% 'Estate Tax' that is triggered at death). I'd need to check the decoder ring, but I think FAFSA values "net worth" at more than the equivalent income it produces (in addition to counting the income it produces! Double Whammy!).

-ERD50

 

[Gone4Good]

I wonder how many on the forum get half their income stream in qualified dividends?

Probably more than you think. At current yields a 60/40 asset allocation can very easily generate 4% in income with nearly half coming from dividends. Without even trying to juice yield the SPX & Bond Index gets you to about 3.4%. I'd argue that all of us who don't have a pension will be in this category. We'll also have a large portion of that normal interest income shielded by tax advantaged accounts.

(let's not forget the 55% 'Estate Tax' that is triggered at death). I'd need to check the decoder ring, but I think FAFSA values "net worth" at more than the equivalent income it produces (in addition to counting the income it produces! Double Whammy!).

In the list of things that concern me, student loan subsidies and IRA access once I'm retired ranks only marginally higher than things that happen once I'm dead.

 

[Htown Harry]

There *is* a reason, and it is far more than the bulk quantity deal. It has been discussed on the forum before - the total pool, versus a self-selected group...

This is why many of us see that any govt ins system will need to have everyone in the system and spread the risk, or prices will stay high for those who want ins...

I know that ins cos seem to pull dirty tricks from time to time, but this isn't one of them - they have to charge that way.

-ERD50

There is lots of support for your self-selection points in this article (editorial?) in the New England Journal of Medicine, which makes a strong case for an "everyone must be insured" mandate:

http://content.nejm.org/cgi/reprint/NEJMp0904729v1.pdf

The Individual Mandate — An Affordable and Fair Approach
to Achieving Universal Coverage

"Some of the most prominent shortcomings of the U.S. health insurance market are rooted in the fact that the system is a voluntary one. Outside the state of Massachusetts, which recently instituted broad-based health care reform, no one under the age of 65 years is required to obtain health insurance coverage of any kind. Voluntary insurance markets have led to a system centered on segmenting health risk instead of one whose primary mission is ensuring affordable access to necessary and efficiently provided high-quality medical services.

But the past need not be prologue. The orientation of our system and the distorted incentives that it creates can be changed. A vital component of such a change would be bringing all U.S. residents into our health insurance system through an individual mandate..."
​

 

[rnsmth]

We had dinner with a couple in Merida, Mexico in December. They retired there about 5 years ago. They said that to maintain their insurance in Colorado would have cost them about $12,000 a year. They were paying $3,000 a year for an international policy. He just turned 60, she is a a few years younger.

That is more than chump change.

 

[dex]

We had dinner with a couple in Merida, Mexico in December. They retired there about 5 years ago. They said that to maintain their insurance in Colorado would have cost them about $12,000 a year. They were paying $3,000 a year for an international policy. He just turned 60, she is a a few years younger.

That is more than chump change.

Did either or both have a chronic condition?
If not 6K or 500/mo for one person - my guess it is for a policy with a very low deductible; and might include eye and dental. Possibly, the cost of continuing their corp ins. Check out Colorado BCBS.for a 60 y/o person

 

[rnsmth]

Did either or both have a chronic condition?
If not 6K or 500/mo for one person - my guess it is for a policy with a very low deductible; and might include eye and dental. Possibly, the cost of continuing their corp ins. Check out Colorado BCBS.for a 60 y/o person

No chronic conditions - but let me be a bit more clear - these are not USA insurance policies they have. They are international policies. With many of these, if you get sick in the US, you get 30 days of treatment to get well enough to get back to Mexico.

I took their word for it that it would cost that much to replace their work-based insurance policy in the US - perhaps that was the COBRA amount.

 

[M Paquette]

No chronic conditions - but let me be a bit more clear - these are not USA insurance policies they have. They are international policies. With many of these, if you get sick in the US, you get 30 days of treatment to get well enough to get back to Mexico.

I took their word for it that it would cost that much to replace their work-based insurance policy in the US - perhaps that was the COBRA amount.

Hi, Ron. 12K/year sounds about right for continuing a work plan (low deductible) for a couple through COBRA. My COBRA for a family (3 of us) is 1164/month, and includes dental and vision plans. Yeah, ouch. We're in good health, so I've applied to switch to a high deductible individual/family plan with Health Savings Account, which will cut the cost significantly.

 

[dex]

Hi, Ron. 12K/year sounds about right for continuing a work plan (low deductible) for a couple through COBRA. My COBRA for a family (3 of us) is 1164/month, and includes dental and vision plans. Yeah, ouch. We're in good health, so I've applied to switch to a high deductible individual/family plan with Health Savings Account, which will cut the cost significantly.

I think that is the key many corp. plans have a low deductible and include dental and eye ins also. Or, could be Cobra. Either way when healthy people quote such high health ins. premiums you have to question if they did their homework and their assumptions.

Generally speaking, this is the same issue in the health ins debate - consumer knowledge and understanding of the objective of health ins.

I (54 y/o) have a BCBS - I choose my doctors - plan that is $150/mo (5K deductible?) 3 dr visits w/$40 co pay.