Nov 5, 2017 533 comments

When Your Shitty Health Insurance Doubles in Price

Well, despite Mr. Money Mustache’s outrageous optimism, I think we all saw this coming. I opened up my premium renewal email from Kaiser and saw this:

Figure 1: My new insane medical insurance premiums for the minimum available “Bronze” program, with a $6500 deductible.

My family’s monthly health insurance premium, which had already more than doubled in the last few years to $674 per month, was going up a further 44% for the coming year. For no good reason, other than perhaps the the current government’s attempts to kill off the Affordable Care Act. (By cutting various parts of the structure, the insurance market becomes less stable and predictable, and thus more expensive).

Now, before we go any further, I have to note that this is a situation that only affects high income earners. If we were really retired on a $30,000 passive income as we were for some of the decade before this blog started making significant money, our family’s monthly cost would be more like $128, due to tax credits and the Children’s Health Plus plan.:

Figure 2: Net insurance cost for a $30k per year family of three.

But in my email, I just saw the thousand bucks. And if you know how I feel about rules, unnecessary costs, and insurance in general, you can probably guess what my initial gut reaction was:

“Fuck. FUCK THAT! This is absolute bullshit. Fuck you, I quit, I’m not paying it.”

But, since I’m not sixteen years old anymore, I was eventually able to get past this first stage of the analysis and think about an actual course of action.

After all, all the power and freedom in the world is of no use at all, if you choose to wallow in your anger rather than taking steps to create the life you want. So I thought about why I was so angry. It boiled down to this:

The premiums are not an accurate representation of my risk.

The value of medical insurance is pretty easy to estimate: the National Institute of Health calculates that the average person consumes about $449,000* in health care spending over an 80-year lifetime, or $5600 per year. This is less than my plan’s deductible alone, which eliminates the value of insurance right off the bat. My plan really only covers catastrophically expensive events, which means it is unlikely that I will ever use it.

Plus, most medical spending is loaded towards the last decades of life, where the Medicare program already picks up the bulk of the costs. And, we are healthier than average – aside from one baby delivery about twelve years ago, none of us have ever actually benefited from health insurance in over nineteen years in the country.

When you add up these factors, it is obvious that the insurance is a bad deal. When presented with overpriced insurance, I always just choose not to buy it, which is also called “self-insuring”. But whenever I talk about self-insuring for medical expenses, everyone asks the same question:

“But what if you do get hit by a falling piano and have to spend months in the Intensive Care Unit?”

The answer is that I guess I’d receive some large medical bills!

I’m not denying that an expensive treatment absolutely can never happen to me. I’m just putting an estimate and a limit on how much I am willing to pay for insurance on it.

Remember, health insurance is not really health insurance. It’s just “large medical bill insurance” – a shaky precaution against having to pay for expensive procedures, so you can keep your investments instead of using them to pay the bills, perhaps eventually becoming poor enough that you are covered by public health insurance (Medicaid). A better name for it might be wealth insurance.

We have been trained to think that going without medical bill insurance is very risky. But that’s just because the subject appears frequently in the news. If it weren’t such a hot topic these days, the average person without a chronic illness would rarely think about it.

After all, by comparison, what precautions have you taken against being hit by a meteorite? There could be one streaking towards you right now. It could kill you, or your children, or it could leave you with a lifetime of chronic care costs. Are you telling me you don’t have separate meteor insurance? Why not?

In 2013 a 60-foot chunk of rock came from space and hit Russia with the force of 30 Hiroshimas. The human race escaped with just 1500 injuries, but only because the rock came in at a shallow angle and landed in a very remote area.

If space rocks are too far-fetched, how about motor vehicles? If you choose to drive a car, you are willingly throwing yourself into a far riskier situation than simply self-insuring for medical bills. Even more dangerous, statistically: being inactive and/overweight, a boat in which over 66% of us sail every day.

The point is that while huge, uncovered medical bills are inconvenient, they are rare. Therefore, my willingness to pay for insurance against them must have a limit. I’d definitely pay $50 per month for it, but should I be willing to pay $1000?

What about $2000? $4000? $12,000 or $1 million per month? I think that everyone would hit their “Fuck That” point somewhere in there.

And remember, this problem of expensive medical procedures is unique to the US. You can take your dollars almost anywhere else in the world and pay out-of-pocket to get the same (or better) quality care for a fraction of the cost. At some point, a rational person has to be willing to stop overpaying for this inefficient system.

After doing the math, I decided that my limit is definitely less than $1000, which means I should at least consider other options. So I looked into some of them:

Full Self Insurance
2.9 Months per year of Self Insurance (to avoid IRS penalty)
Medical Tourism
joining a “Healthshare Ministry” like Libertyshare
expat insurance like Cigna
Artificial poverty (reducing my income to a level where we’d qualify for subsidies)

Self Insuring is the easiest choice: you just don’t renew your insurance and start banking that sweet surplus right away. There is a tax penalty for that: $695 per adult, $347 per child, or 2.5 percent of your adjusted gross income – whichever is greater. Thus, a family with $100,000 of income would pay a $2500 fee. With my new premium at $11,500 per year, the penalty would still be cheaper all the way up to $461,000 in income. Plus, there are a surprising number of qualifying exemptions, including a death in the family within the last three years, a category which unfortunately includes me.

A 90 Day Insurance Vacation is the lightweight version of self-insurance. The penalty only applies if you were uninsured for three months or more. So if you start your insurance during the enrolment period but then cancel it on, say, October 2nd, you cut your premiums by about 25% in exchange for the reduced risk protection. Just be sure to postpone your Wingsuit Jumping vacation until at least the new year.

Medical Tourism is an important thing that every US resident should be aware of. After all, we live in the country with the most overpriced medical procedures in the world – why should we insist on doing 100% of our shopping here? This would be like insisting you buy only US-produced goods and services: no electronics, no shoes, no Amazon and no blueberries in winter. We should all read a book or two on the subject to understand just how easy it is, to free ourselves from the US-centric assumption that doctors are shockingly expensive.

There’s a lightweight version of medical tourism too: simply comparing insurance pricing from one state and city to another. From a quick search I see that Colorado is one of the more expensive states for health insurance, with New York being the worst, and the best three being California, Utah and New Mexico. As with everything, it’s good to shop around when choosing where to live, and regularly challenge yourself by asking, “Is this where I’d settle down if starting from scratch?”

Health Sharing Ministries like Liberty HealthShare looked like the most promising loophole. Due to the strong influence of organized religion in the US, if you can join one of these, you are exempt from the tax penalty. The downside is the same as the upside: these ministries are exempt from ACA rules, which means they can drop you for having a pre-existing condition. And they also want you to affirm their value system, which can range from agreeable stuff like “taking care of your health” to excluding coverage for things that violate religious taboos like abortion or attempted suicide.

Expat Insurance sounded promising when I first heard about it from some fellow Canadian early retirees who write the blog Millennial Revolution. Companies like Cigna will cover you for worldwide medical costs for a fraction of what we pay here in the US. But the hitch is it only applies if you are truly on the road and don’t actually reside here. So it’s not an option for now. But in the long run when I retire to an oceanfront compound (or commune?) in Costa Rica, yes.

Reduced Income is the last and least feasible option on the list for me right now, but it’s genuine and not even artificial in the case of the typical early retiree.

Suppose you are retired with, say, a mortgage-free home and $800,000 in index funds, and living on a plentiful $30,000 per year. Your income tax return will show only about $18,000 in dividends, some of them even tax-exempt. On top of that, you’ll sell just a few shares and pay taxes only on the capital gains. This taxable income in the mid-20s will keep you in a very low tax and health insurance bracket.

So What Path Did the Mustache Family Take?

I brought all this stuff up to Mrs. MM – the other, less morally-outraged, leader of our household. Our conversation brought up a few things:

Although a $12k insurance bill is insane, we would not even notice a $12,000 difference in income taxes if the brackets were to change. We currently have a high income, but this has not caused us to increase our family spending at all. This is because of the magic of living below your means: once you have enough money, the surplus is just that: a big, fat, awesome bonus. Since I want this enormous surplus to go back to society over my lifetime, why should I be upset about some of it paying for other peoples’ health insurance right now?
But, I countered, this doesn’t apply to everyone. The typical MMM reader earns enough money to be hit by these higher premiums, and many are raising families and running small businesses, thus purchasing health insurance on the open market. At the same time, they are trying to save as much money as possible to reach financial independence while they are still young enough to enjoy it. Burning $12,000 per year on mostly-useless insurance can wipe out 25% or more of the amount you could otherwise save for retirement.
Given this, the Healthshare ministry was one of the better compromises. However, she felt that pretending to agree with a religion (especially if it’s one that actively oppose some things we value like same-sex couple equality and women’s reproductive rights) wasn’t worth it for us.
In my own hypothetical pre-retirement situation (a self-employed couple making $200,000) I would probably go for full self-insurance, simply paying the tax penalty whenever necessary and using medical tourism for any expensive procedures.
But also remember that if you’re a high-income business owner, your business can pay for your health insurance with pre-tax money. This cuts your net cost after taxes by 30-40%, making it a subsidized program after all.

So in the end, we’re just letting the policy auto-renew for now, using that last bullet point as a consolation prize. And these premiums will probably remain outrageous, unless we fix the underlying problem in the US: it’s not the insurance, it’s how much money we waste on medical care. If the Medical system could grow a Money Mustache**, I am certain we could cut our costs down by at least 75%, just as the average consumer can cut their costs by a similar portion just by learning to life a joyful and efficient life.

Further Research:

After this article came out, a reader told me about the site “Health Care Bluebook“, which allows consumers to look up typical costs of various medical procedures. Many are less expensive than I had assumed.

Footnotes:

* I adjusted the NIH paper’s 2000 numbers to 2017 dollars.

** Ideas for making US healthcare less expensive – please critique and add your own in the comments!

Eliminate the 75% of healthcare spending we currently waste on self-imposed lifestyle diseases: eliminate subsidized urban car infrastructure in favor of muscle-powered transportation. Treat soda and products with added sugar in the same way we currently treat liquor. Treat health and fitness (rather than medical treatment) like a human right, instead of a vanity accessory just for rich mountain-dwellers and celebrities.
Make health care purchasing look more like Wal-Mart and Amazon, and less like the DMV. Every standard procedure needs to be listed on a menu with a price, and those need to be on the front door so they are subject to competition. By huge national or even international companies and co-ops.
Drastically increase the supply of doctors, and make the job more enjoyable: Cut mandatory work hours for residents from 80 to 40 per week. Modernize the medical school curriculum to eliminate pointless memorization, reflect current technology and reduce the cost of the degree. Open the borders to qualified doctors from other countries. Allow telemedicine – let doctors in other countries certify easily for US diagnostics and prescriptions.
Elevate nurses to do all the stuff they already do, but in their own clinics without working for a doctor and paying the money up the chains.
Start using search engines and artificial intelligence for diagnosis, rather than flawed and expensive humans.
Open state and national boundaries for insurance and hospital services with only the required regulations for safety as we do with other imports.
Eliminate the right for anybody to sue for medical malpractice, or indeed for pretty much anybody to sue anybody else for anything. Let’s make our professional reputation and our actions public and then just suck it up like adults, reinvesting the enormous proceeds currently wasted on litigation.
Figure out if we can make single-payer health insurance work for us as it already does for most countries. There are many benefits, but the biggest is probably just eliminating all the mental energy we each waste on thinking about this mundane topic. As an analogy, imagine if every citizen had to hire their own police force for personal security – just think of how much energy and fear would be wasted on this topic, which we barely have to think about right now. As it turns out, it works the same way with health insurance.

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Greg K. November 7, 2017, 2:09 pm

I think you might be a touch off on the individual mandate penalty. By my understanding, it is 2.5 percent but cannot exceed $2,085 total in 2017. The per-person maximum is $695 per adult and $347.50 per child, so unless I am mistaken, the Mustache Family would max out at $1,737.50.

Citation: https://www.healthcare.gov/fees/fee-for-not-being-covered/

The enforcement mechanism is also extremely weak. It can only be taken from a refund, so if one adjusts one’s withholding to avoid having a refund, then there is essentially no penalty. I think the behavioral economic benefit is more in instilling a dollar value in people’s minds than it is exacting a financial penalty to offset the risk, much as charging a nominal cancellation fee helps to reduce cancellations without notice of doctor’s appointments, rather than capturing the cost of a cancellation. Though, of course, $1,737.50 isn’t exactly nominal, but I digress.

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Freedom40Plan November 7, 2017, 2:12 pm

The mind numbing reality of all this healthcare mumbo jumbo is that for significnat portions of our society, we already operate under a single payer system, and in general, most people are pretty happy with it. Medicare, Medicaid, VA, and Military health. My wife and i just had our first child under the military health system and couldn’t have been more happy (this is actually single payer AND provider in our case). The care was great and one of the best perks was not having to deal with or think about all the administrative and insurance crap!

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Ddub925 November 7, 2017, 2:17 pm

My son went to the Urgent Care last month. He slammed his finger in a door and we thought it might have been broken. They examined his finger, gave him an xray, and determined he was fine. 10-20 min of the doctors time. The EOB I received from the insurance company said that visit cost $1500! For what?!? It isnt just because of tort reform…

On another note, I help small businesses contain healthcare costs. if you have 5 or more employees let me know if you want a unique way to keep increases in the single digits! (and add a bunch of other great HR resources to your team).

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KAK November 7, 2017, 2:56 pm

With all due respect, I think your risk analysis is a little off. You mention the risk of accident. Terrible to be sure BUT hospitals are required to provide emergency care. It may bankrupt you, but you will receive care. Chronic illness is a bigger threat. Let’s say one of your children is diagnosed with diabetes. Without care life expectancy: 1-2 months. Not emergent unless they are in a coma. Without insurance, you will have to pay up front. If you don’t treat it properly, their kidneys will fail, they will go blind, and we’ll chopping off black body parts starting with the toes and working our way up. I am neither kidding nor exaggerating. I am, in fact, sugar-coating it. There are many more complications that will occur. So you will need to buy an insulin pump and a meter and supplies. The meter isn’t bad–only $100 bucks or so. The supplies will go another $100-$200 a month. The insulin pump can cost as much as a house. Maybe you get one from another country and save some money but you will need to get the supplies every month. Also if the pump messes up, your child dies–probably within minutes in front of your eyes. Now let’s talk about insulin. In the eighties, insulin cost a couple of bucks a month. It cost pharmacists more to fill the prescription than they could charge but they made it back on the needles. Now insulin will cost you $1000 to $2000 a month. Drug companies stopped pricing it based on what it cost to make and started charging based on what you would pay. not to die The same is true of asthma meds and chemotherapy. If your child is diagnosed when you don’t have insurance you have a pre-existing condition of monumental proportions. That child may never have insurance until his kidneys fail and then he will be picked up by medicare.
I picked diabetes because it is so run of the mill. I could have said cancer and your estimation of the odds change based on recency bias. You know diabetics; you may not know cancer patients. But here’s the deal. Nobody plans on getting sick. In a young family, illness is based on bad luck combined sometimes with genetic predisposition. Lifestyle plays less of a role.
I agree totally about single payer as long as we reign in costs in line with the cost of care. Market forces don’t work when because we do not have an equally motivated seller and buyer. When the buyer will die or suffer, the seller can charge what they want. Insurance may warp this somewhat, but as someone pointed out insurance pays much less than the uninsured pay.

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Becky November 7, 2017, 3:58 pm

Really grateful for this post. We’re in the exact same boat but since I live in a lower class community I felt like I must be missing something about the system, as we seem to be all alone with our horrible expensive plan with impossibly high deductible. The worst thing about it is the fact that I feel so alone. We go to the doctor or pharmacy and the receptionist – every single time – feigns a heart attack like they’ve never seen worse insurance. But your post makes me feel like I’m not alone. Thank you for that. I still don’t know what the right answer is for us but we’re leaning toward self insurance. The premiums are high enough for our income that we would be exempt from the IRS penalty, I think. Another issue is that almost all insurers have left this community. We are down to only 2 choices from marketplace. Kaiser and one other HMO.

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john shryock November 7, 2017, 4:51 pm

In lieu of single payer ( which I want but don’t think it will happen soon) the government could set a lifetime deductible at , say, 100k after which one is covered by medicare. Individuals could still be on the hook for 100k maximum payouts but no more. Insurance costs would then drop to affordable levels that could cover that 100k as the risk for health insurers would be a known quantity. I know, I’m dreaming, but why not?

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Mr_MSW November 7, 2017, 6:26 pm

Long time reader, first time poster on a topic I’ve followed with interest from my time in the “body shop.”

I wanted to pick up on the comment you made about the average cost of healthcare relative to your premium – ie, that since the premium and deductible was so much higher than the average per-person cost of healthcare, that it’s a bad deal. That’s a really good point – I think that in a properly-functioning insurance market, the cost of premiums & deductibles should be approximately this average, plus some profit for the insurance company of course.

I think that one of the reasons why ACA insurance rates are so much higher is that there are lot of adults who have elected to just go without insurance – mostly people who are young and reasonably healthy, and (somewhat reasonably, I think) have just decided that the cost of insurance isn’t worth the benefit to them. This tends to skew the population of insurance-premium-paying people towards a population that is older and sicker, which drives up the average per-person cost for this group – which in turn drives up premiums substantially.

Another reason for the higher premiums is that the ACA population does not include many people with jobs, since they mostly get insurance through work. I’d be willing to bet that – inspiring FIRE bloggers /families and also self-employed people notwithstanding – this also skews the ACA population towards people who are physically unable to work (ie the old and sick), which also drives up the average cost per subscriber and therefore drives up premiums.

One possible solution would be to eliminate employer-provided insurance, which would make people shop for insurance on their own. I’ll bet most people have no f—ing idea how much their employer-provided insurance costs them, since their company pays most of the costs and generally hides it from them. If people had to pay for it out of their own pocket, they’d shop around for better deals on health insurance, which would create more competition that would reduce premium costs.

This also may help push the insurance companies to drive for harder bargains from the health insurance providers, which would finally eliminate many of the inefficiencies in health insurance delivery. (That’s one thing I learned after spending lots of time in the hospital – our healthcare system can be disgustingly inefficient for the money we pay!)

Better yet, I’d like to see see health “insurance” go back to something that actually acts like insurance – and not the “all you can eat” buffet that the term “health insurance” really means in this country. I’d love to see a system where everyone has to carry catastrophic insurance for costs above a certain value, but everything else comes out of pocket. This would force people to understand just how much this stuff costs, and that pressure alone would help to drive costs down. My understanding is that this is the system that many countries use now. Unfortunately I think that

In any case, I think you need to have a system where everyone participates – it can’t be optional as it is now under the ACA, since the penalty for not having insurance is generally much less than the premium costs. This would likely drive the insurance premiums down closer to the average per-person healthcare costs, which is still high but better than we are now wrt premiums. Ultimately, the easiest way to make that work is to have the government provide it in exchange for higher taxes. Sucks to say that as a conservative, but it’s the best of a bunch of lousy options.

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Kirstin J November 7, 2017, 7:30 pm

Something to consider that I don’t see mentioned, when health insurance is too expensive or while on the « 90 day insurance vacation» is to have just accident insurance. For the younger/healthy lifestyle that has a lower risk of medical issues this can cover a bike accident or broken bone or other accident that is not a medical condition. I used to recommend this to triathlete friends and others I knew with no insurance. An accident is often more likely than a medical issue and that at a minimum should be covered.

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Greg Gemson November 7, 2017, 7:57 pm

Dear Mr. Money Mustache,

Huge fan of this blog – I’ve been reading it for 3 ½ years, and look forward to every new entry. But respectfully, this entry of the MMM blog, as well as number of the comments to it, gets quite few things wrong.

Since I don’t want to spend all night cataloguing each and every error, I’ll instead just point out the biggest “Doozy”, and then implore you to read a bunch of columns by columns BloombergView’s Megan McArdle, who has written extensively on American health care and the myriad problems created by Obamacare.

Let’s jump to the “Doozy”: The spike that you are seeing in your health insurance premiums is not because of the “current government’s attempts to kill off the Affordable Care Act”. The spike you are seeing in your premiums is BECAUSE of the Affordable Care Act itself.

Premiums in the individual insurance market have been increasing quite dramatically every year since the ACA exchange markets came into being – President Trump’s undoing of the illegal and unconstitutional insurance company bailout known as the “Cost Sharing Reduction (CSR)” Program has had essentially nothing to do with the spike you are seeing in Colorado today, and absolutely nothing to do with the spike massive spikes in years past.

https://www.bloomberg.com/view/articles/2017-10-13/obamacare-was-built-with-the-flaws-trump-now-exploits
https://www.bloomberg.com/view/articles/2017-01-18/the-once-and-future-obamacare-death-spiral
https://www.bloomberg.com/amp/view/articles/2015-11-03/cost-of-cheapest-obamacare-plans-is-soaring

On a related topic, here are some more articles on health care addressing why “Medicare for All”/single-payer won’t be a panacea for American health care costs or health outcomes/life expectancies.

https://www.bloomberg.com/view/articles/2017-03-21/does-the-u-s-overpay-for-health-care-not-really
https://www.bloomberg.com/view/articles/2017-06-07/why-not-try-medicare-for-all-glad-you-asked
https://www.thedailybeast.com/study-giving-people-government-health-insurance-may-not-make-them-any-healthier

Further to these points, many critics complain about the high cost of American health care and the less-than-optimal outcomes compared to other countries. What those critics fail to mention is that life expectancies for individuals diagnosed with every single variety of cancer known to man (and woman) are substantially higher in the U.S. than in any other country on the planet, that the vast majority of pharmaceutical and medical technology innovations are invented and produced in here in the (still slightly more free market) U.S., and if you net out deaths by homicide and automobile accidents across all countries, U.S. citizens actually have longer life expectancies than the citizens of every other nation on Earth.

I could share more, but I’ll leave it at that.

Thanks,

Greg Gemson

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- Mr. Money Mustache November 11, 2017, 6:39 pm
  
  Thanks Greg! But for future reference, the “opinion” pages of Bloomberg aren’t very good objective research sources. Either way, we can agree that something is broken and probably won’t be fixed in the near future.
  
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Xochitl November 8, 2017, 4:40 am

Hey MMM Family – can your business(es) use a PEO? I’d love to know. Check out what ADP and EmpowerHR do.

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Louis November 8, 2017, 8:19 am

I take a militant approach when I get insurance premium increase.

When they send me an increase above inflation level for no valid reason, I change company. I change even if I don’t save money changing. I think it’s my civic duty to do so… We need to teach the insurance company that ninja premium increase cost them customer.

I have no illusion that my action has a big impact, but if everyone did the same maybe we could get them to stop this mode of operation.

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- Daniel November 10, 2017, 1:33 pm
  
  Doing that too… They think people won’t notice.
  
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Yokan November 8, 2017, 8:22 am

Healthcare is the big black swan event I’m having trouble planning for in my own Financial Independence journey. I know you can mitigate alot of the risk by eating healthy and exercising but eventually those expenses become inevitable. My mom works at a Hospital and the amount of patients they have with no insurance is mind boggling. The hospitals are still required to treat these patients even if they don’t have the insurance. They usually end up setting up payment plans that hardly get collected on. That’s a huge part of why the costs are so high. The hospitals have to subsidize those without insurance.

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Jon November 8, 2017, 8:23 am

OK, so we want everyone to have universal health care. What is the best way to accomplish this? The current system that the US is using is a crony capitalist system. That is, government and industry collude to create onerous regulations which causes prices to rise and quality of service to go down. Which is pretty amazing because despite these problems the US still has some of the best medical care in the world in many areas – getting people to come to the US get this high quality care.

In “The Law” Bastiat said we basically have the following three choices:

1. The few plunder the many.
2. Everybody plunders everybody.
3. Nobody plunders anybody.

We have been persuaded through our schooling and society that it is OK to use force and plunder other people’s wealth. We need to step back and ask, “Is this really OK?” We see the outcomes of this plunder and find that the services they provide are truly subpar and makes society as a whole poorer. Even here on the MMM blog we find that MMM himself has stated that he wants to minimize how much he is plundered (lower his taxes) to the greatest extent possible, unless the effort outweighs the savings. We can see that MMM himself doesn’t truly believe that government is the best way to help people since he doesn’t donate all his excess cash to the government but has set up his own charity to help people the best way he can. Why? I would posit it is because he doesn’t truly, deep down, believe that government is the best way to help others become their better selves and to get out of poverty. We see a duel personality as we see among everyone, even myself. That’s why I ask, “Is using the violence of the state truly the best way to help one another and live peacefully together?” I believe history has shown that this is not the case.

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Gene November 8, 2017, 8:50 am

My wife is retired but not yet 65 and we purchase her insurance through the market, a bronze plan for over $ 900/mo. I am going from full time to part time work at the end of this year but was planning on working enough to be eligible for insurance from my employer at a very reasonable charge. I can add my wife to the company plan but would have to pay the full amount, again in excess of $ 900/mo.

With the reduced income from only working part time and managing our expenses we expected that my wife would be eligible for the premium tax credit to reduce her premium. Imagine our surprise when we learned about the “family glitch”.

There is a provision in the law that says if one member of the family has “affordable” coverage through an employer then the other family members are not eligible for the premium tax credit regardless of family income. Affordable is defined as the cost to the employee being ~9.5% of their income. I will flunk that “affordability” test.

So the end result? I told my employer that I will work less hours making myself ineligible for company sponsored health insurance. We will buy a family policy for the two of us and will manage our income to stay below the IRS limits.

What’s smart about a provision that forces someone to work less hours in order to have affordable insurance for their family?

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Sharon November 8, 2017, 8:57 am

I earn just barely above the limit to qualify for subsidies. I consider myself very fortunate and I lead a rich quality of life, but I am not a high income earner. I take excellent care of myself, which is its own reward, but it sure would be nice to get some kind of financial rebate on all the money I’ve been paying to subsidize the system. For now I’ll continue to pay even the newly jacked up premiums for my mediocre bronze plan knowing full well that it’s bankruptcy insurance that I”m paying, NOT “health” insurance. But I will also forward this post to my congressional representatives..

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Rob Misio November 8, 2017, 9:06 am

> From a quick search I see that Colorado is one of the more expensive states for health insurance, with New York being the worst, and the best three being California, Utah and New Mexico.

California being one of the best is not true in my experience. I live on the central coast of California and this year, for a HSA bronze plan for my wife, young child and myself, we will be paying $877 / month. 4800 / 9600 deductible.

So… sounds like it’s slightly better than the Colorado situation, but not by much and I still find it absolutely ridiculous, since we’re really just looking for catastrophe protection.

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CapitalistRoader November 8, 2017, 12:04 pm

Brian Y: “Regarding the Artificial Poverty/Reduced Income, is there ever a case where the actual assets are considered when approving a persons eligibility for reduced insurance rates, or do they strictly rely on annual reported income tax?”

It’s a two-step process on Colorado’s (and I expect all states’) Obamacare website. First, you go through a Medicaid screening process. If your income is under X dollars then you have to list all your assets. Allowable assets under Medicaid are, as you’d expect, very low; something like a couple of grand in cash or securities. I think you can have a house but I don’t remember exactly if it has value limit.

Once you get kicked out of Medicaid for income and/or assets you get kicked over to the Obamacare website. With Obamacare only annual AGI is considered. Obamacare doesn’t consider assets at all for determining the monthly federal subsidy you’ll get, if any.

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Will November 8, 2017, 12:25 pm

While the premium costs certainly suck, it seems very un-mustachian to live according to an actuarial table. Having had my family go through a “statistically unlikely” event that ended up with a list price damn near $500,000, I can tell you I was grateful for my lame, expensive, $5,000 deductible insurance. Total out of pocket cost was around $8k after the emergency room, ICU, orthopedic rehab, etc. (full recovery). Had we self-insured, bankruptcy would have been the only option, and retirement, early or otherwise, would have been very difficult indeed. I think Mrs. MMM is right on this one. If you can afford it, pay the premium and keep your peace of mind.

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The Frug November 8, 2017, 1:55 pm

Great post. Some great info here, especially in the comments. Glad to know I’m not going this alone. As a part time solopreneur, I was a bit shocked when my premiums for a family of four jumped from $175o to $3400 a month. I did some quick searching on healthsherpa.com and using their handy premium calculator I noticed that for a family of four if your income is under $98,000 you can get a subsidy of over $1300 per month. As soon as you go over 98K there is no benefit for a family of four. As a small business owner, you can also write off your premiums and have the company contribute to a HSA plan for you. If you add all that up, and can get your total AGI below 98,000 you should be able to qualify for a $ 1300 a month subsidy, using the affordable care act. This is for the state of Virginia, but the subsidies should be fairly consistent even if the premiums aren’t in your state. So if you have an opportunity to lower your AGI through business expenses, cutting your salary or high contributions to tax-advantaged accounts this could be the strategy for you. I’m not sure I’ll qualify but I can still put estimated income into healthcare.gov and choose to take a portion of the subsidy just in case. I also noticed that a lot of the plans qualify for HSA minimums because their deductibles are so high so that’s something you definitely want to take a look at. ( A lot of the price search sites have removed the HSA checkbox that used to limit the available policies drastically)

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Tom November 9, 2017, 5:55 am

So was the conclusion that you’re paying for ACA coverage as a business expense? Does that complicate the sign up process at all? Also, would you write a bit more about the low income tax credit that would have reduced your premium effectively to $128 per month? Is that an end of the year tax credit, or do they just price it correctly for you from the start?

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ezd2027 November 9, 2017, 11:54 am

I know a few people who think the single payer system run by the gov’t would be highly inefficient. Plus, the for profit health industry is not going to let profits/sales decrease. Just because you have a single payer system doesn’t mean that will reduce costs at privately run institutions.

My sister lives in a small town, works at the hospital in marketing. Why does a hospital need marketing? They are concerned with a chain clinic coming in and stealing away patients (and doctors). They have a doctor supply issue as well. The sad thing about my sister is a few years ago she worked at a non-profit working off a government grant educating kids about eating healthy foods. Now she is just another cog in the current system of healthcare.

This brings to light the same issue I have in my job, where our parent company is in Europe, a smaller, higher density country. They have more customers, and in a smaller area (high density). In the US, all the same products and services are more expensive due to limited cost of scale.

I think maybe you can only compare the US to our northern neighbor in Canada where the density issue also exists. How is this accounted for in Canada?

Let’s say you can change people mindsets about how they add to the healthcare costs. How do you then cause change in the for profit health industry from the institutions, the drug makers, to equipment makers, to supplies?

Then you have the issues highlighted by the workers having to use Emergency care (I know the feeling because when my family does get sick it seems to only happen on the weekends. We use urgent care when needed, but many (like small towns) probably do not have this option. I would personally love to see a list of hurdles and what we as society can impact to bring costs down and fight against the “machine”

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MKE November 9, 2017, 12:10 pm

Back in the 90’s, when doctors first began their assault on America, I was in engineering school. We had a seminar where executives came in and spoke. One after another, they came in and expressed gratitude and an undying desire to be better and do better every day. They praised competition. They spoke of their desire to serve their customers and improve their competitiveness. They relished cutting costs and improving service.

Then came the visit from the CEO of the largest medical complex in Wisconsin. He was entitled and arrogant. He actually spoke the words, “we are too important for competition.” He said the government should protect his business from competitors. He said prices should not be revealed to anyone, that whatever they charged was whatever they charged, costs were not an issue. He never once spoke improvement of any kind, or trying to serve the customer. He was a doctor, the top doctor at the largest hospital in the state, and he didn’t give a flying fuck about anyone. He wasn’t shy about it. I wondered if he was joking. I wish I had a recording, and I am still in shock two decades later. His message, essentially, was “Fuck you. Try to stop us.” Horrifying.

Since then, medical practitioners have systematically mowed down the self-employed, then the small business, then the large business. Their costs keep getting passed along. They have spread their brand of poison into once-cheaper areas like Colorado. All along, their victims have simply looked at other victims before them and said, “Loser. That won’t ever happen to me.”
Now it’s happening of all of us. Maybe not Utah yet, but Utah has it coming. Oh, yes, they do.

Our medical system has deteriorated and doctors’ salaries continue to skyrocket. I never wonder why. With various exposures, my own and that of relatives, to the medical system- car crash injuries, minor emergencies, cancer battles – I see the imprint of this man’s thinking on every doctor I have met. Nothing but arrogance and entitlement at every turn.

When costs at the source are ridiculous, ALL resulting costs, insured or not, will also be ridiculous. You can try to cover it up all you want, but medical tourism, high deductibles, and religious group coverage won’t cut the head off the snake.

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- Daniel November 10, 2017, 1:36 pm
  
  My solution for now… avoid going to the doctor. I am not going to feed those leeches myself. Plus, I have and HSA, so more incentive to save my money.
  
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Charles November 9, 2017, 3:09 pm

The expat plan option does not meet ACA requirements so if you are in the US for more than 35 days out of the year you will be hit with the individual mandate. Of course you can choose not to pay it (it just gets subtracted from your tax refund).

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Ryan November 9, 2017, 8:51 pm

We all need a Uber of healthcare. For a monthly subscription fee, you’ll get unlimited medical care that meets ACA standards. Work through an app so you can make an in person appointment or virtual consult. I would love to do this as a medical provider. The provider becomes your insurance provider. Any specialty test will come out of the primary care providers pocket. People should not have to pay for services like CT in perpetuity which you do in the US healthcare system.

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- Daniel November 10, 2017, 1:38 pm
  
  Just open the market to foreign doctors. Initially, their malpractice insurance will be high. Some will go under, but I bet the majority will be successful.
  
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SirSavesaLot November 9, 2017, 10:16 pm

One important point that is often overlooked in these discussions: universal health care and single payer health care aren’t necessarily the same thing. Many countries have universal health care without having single payer.

This is a decent explanation:
https://www.medaxiom.com/blog/the-single-payer-vs-universal-coverage-conundrum

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Mr. Gezond November 10, 2017, 12:33 am

Wow, your health insurance expenses are incredibly high.
When checking out my own october month I thought mine (Netherlands) where high already with €105 a month.
Thanks for brining me back to reality!

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Mack November 10, 2017, 7:58 am

I love this article but have a question – MMM, you say that “while huge, uncovered medical bills are inconvenient, they are rare.” What does rare mean in this context? I am an epidemiologist (and physician, full disclosure) and prefer to make data-driven decisions when possible. I want to know what my risk of running up, say, a $100,000+ bill in a single year prior to Medicare kicking in is.

I spent some time looking for data on this an haven’t had any luck – the closest I’ve come is data on bankruptcies filed for medical debt (which may be more related to poor financial management and rather than the medical bit). Does anyone have a good source for this type of data, or are we just guessing and making assumptions based on anecdotal experience?

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- Mark Schreiner May 13, 2021, 6:52 am
  
  The lack of easy-to-access and easy to understand information on risk for the individual or household is a major (but relatively easy-to-solve) issue in the USA. Of course, the insurance companies have this data (they use–or used to use it–to determine prices). But we individuals/household do not. I may have reason to believe that I am more or less risky than the average person, but I do not know, for example, whether my risk of spending, say, $100,000 out-of-pocket in the next 10 years is 0.1%, 1%, or 5%. And that data is exactly what Mack is asking for and what we all need to make the best decisions. MMM just said, “rare” but of course he would use the actual risk estimates if they were available and instead say, “1% over your lifetime” or whatever it is.
  
  By law in the USA, we all have access to our credit scores, which are in essence estimates of our costs to lenders of serious repayments problems on our debts in the next year. But our “health-cost score” that would be an estimate of our own costs to ourselves for medical issues over the next 10 years or our remaining lifetimes, is completely unavailable.
  
  Because I lack these estimates, when it comes time to choose a insurance plan, deductible, and so on, I am more or less flying by the seat of my pants, and that is not a good way to make a Mustachian choice.
  
  The good news is that providing such an estimate is something that the government could do with the stroke of a pen, either by requiring insurance companies to provide you with their estimate of your costs, or by having the government get the data and provide the estimate.
  
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W Copeland November 10, 2017, 10:38 am

In Texas we passed a medical malpractice law that made it almost impossible to sue a physician, in many cases. It has not saved us anything on healthcare costs. Buying insurance across state borders will encourage a race to the bottom on covered costs. You will also have no one to contact about a charge dispute. You cannot call your states Insurance regulator on a policy bought in another state. If we cannot even agree to allow Medicare to negotiate for prescription costs how can anyone possibly think we are going to logically solve the healthcare cost issue. This problem will only be solved after the healthcare system implodes due to ever increasing costs. “Americans can always be counted on to do the right thing, after all other possibilities have been exhausted”. Winston Churchill.

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ConnorFromAK November 10, 2017, 12:44 pm

Wow! your health insurance is cheap! Do me a favor MMM. Head over to https://www.kff.org/interactive/subsidy-calculator/ and plug in Alaska. Then you will know my pain. ACA has been the biggest financial burden to carry for unsubsidized healthcare. Also, Your cited article for the most expensive health insurance doesn’t include the most expensive health insurance state.

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Zack November 10, 2017, 3:50 pm

I was wondering where you got the information for the death in the family within 3 years rule. If I am reading it correctly, the link you provided seems to say it needs to be a death in your tax household that year. Also would you also need to qualify for another exemption anyway?

“A member of your tax household died during the year. This exemption applies only to the month of the death and the month before. You can claim this exemption only if you’re also claiming another exemption.”

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Tamara November 10, 2017, 4:03 pm

Unfortunately, insurance companies drive the system. Of course there is waste on the healthcare side, just as in any other industry, but insurance companies play a big role in determining charges and the types of care you’re allowed to have.

The overhead costs associated with contracting with and filing insurance increase your medical bill. Rates for medical services are driven by the insurance contracts doctors get, which is why you see rates varying from one provider to another. You also have to remember that insurance companies are always looking to deny a claim, so actually getting paid, even with a contract in place, can sometimes be difficult for medical providers. They will deny, stall, and avoid, increasing a medical provider’s administrative costs to chase those dollars. This happens even when people have secondary insurance, such as Medicaid, which would cover those denied claims if they were denied within appropriate time frames. In those cases, they can simply deny and have the government pick up the patient’s bill, but they will still drag their feet until filing deadlines pass, so you see zero dollars for the service by the time it’s all done.

Until we regulate the insurance industry, our system will continue to be a nightmare. Consumers are dead last in this equation. And you’re right…most of the families I work with are lower income, and many who don’t qualify for Medicaid or Medicare simply cannot afford insurance. Unfortunately, they also can’t afford the penalties for not having it.

This over-reach by insurance companies has driven the movement for services such as concierge medicine. I’d love to see an intelligent financial analysis of what might happen if we all just stopped buying insurance and gave our money directly to the doctors for services rendered.

By the way, love your work, even if I do feel guilty for driving my short commute to work! Long time reader, first time commenter.

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Jane November 10, 2017, 6:14 pm

I’m a tax preparer who works with a lot of lower income people so I have been dealing with a fair number of ACA subsidy issues since it started and I wanted to point a few things out.
In your initial scenario you were thinking that if some of your passive income were tax-exempt then it wouldn’t factor into your Premium Tax Credit Subsidy. It does, as of course it should, if you are counting income as a moral or legal threshold :) The ACA uses a formula called MAGI, (Modified Adjusted Gross Income), which will put back in to your AGI non-taxable income like Social Security and Muni Bond interest.
Then I wanted to point out that being self employed gets you a great deal on the health insurance that you are purchasing. You get to write it off, not as a business deduction on Sch C, but as an adjustment on Page 1 of your 1040 form. (And then only up to the amount that earned as profit on a Sch C. If you earned a $1000 profit on Sch C and your yearly health insurance premium was $5000 then you only get to adjust off the $1000 in premiums paid). Just an aside, this adjustment will also lower your total AGI, thus possibly making you fall below the 400% poverty line and you could qualify for subsidies.
Same thing if your 2017 AGI is close to the 400% poverty line limit, up until April 15th 2018, you can contribute money to an 2017 IRA and that will lower your 2017 AGI which could make you now qualify for a Premium Tax Credit or if you got one and have to pay it back because you are over the 400% poverty line then that could help quite a lot.
Ah, tax strategies, ’tis the season, I smell it in the air :)

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- jestjack November 14, 2017, 1:51 pm
  
  Tell us more! I am a landlord and my income tax information is “unique” and varies from year to year. I actually met with an ACA planner and she was unsure what my ACTUAL AGI would be. So rather than pay a penalty I stayed with y insurance…Your thoughts?
  
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Magnolia November 10, 2017, 8:25 pm

We have the same Bronze Plan with Kaiser. We are in our 40’s. Take no meds, and healthy with a 6 year old who is also healthy. The insurance companies are getting rich! I was in shock too, when I received info. that our plan was increasing. We paid less than $1,000 in expenses under this plan (same deductible). We have plenty stockpiled and made the decision to pull the plug.

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Austin November 11, 2017, 9:30 am

There are so many ways to improve – you hit on a lot in the addendum. If you want to make it look like a normal market you have to make people pay out of pocket more. Our percent of out of pocket costs is actually lower than most countries with single payer. There is also a serious lack of competition for hospitals in some regions.

Am I optimistic that all the programs will switch to things like tax credits in HSAs and insurance paying a lump sum for a procedure rather than directly paying for care? Not really. That means all the optimism is on new technology outside of health care. Reducing car accidents from safer, self driving cars will lower demand for healthcare. New genetic technologies that can cure genetic disease, while expensive, can take away years of chronic expenses. Cancer is probably toast, too. As others have mentioned changing the culture around end of life care could help, too. But I’m not hopeful given the physcology on that topic. Basically we have to hope other industries destroy business for hospitals.

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Nick November 12, 2017, 7:48 am

Every year since the ACA I have grappled with this issue. I have managed several years by enrolling in a healthshare ministry to eliminate the fine and purchasing one year’s worth of short term coverage. I can sign the statement page for the particular healthshare I use without hypocrisy, that is nice, but not obviously for everyone. However, there have been too many “Christian” organizations in the past that have packed up and left town with the cash to make me totally comfortable. Thus I have diversified by including a catastrophic short term policy to cover the possibility of bad behavior. I call this the “Jimmy Swaggart” clause. This year I had a setback because of the new rules limiting the short term policies to three months, but there is still a loophole allowing you to underwrite for the year with four separate three month terms.
I am mostly retired and still under 40 so I could take a huge subsidy for my family, however somebody else paying 17,000 dollars a year to insurance companies I hate really bothers me. I am glad you are able to choose not to buy into health share ministries because you disagree with their worldview, however I must point out that the government is trying to force me to buy a policy that counters my worldview! Isn’t it, in essence, like you being forced to buy into one of these ministries?
As some earlier posters mentioned, how about an “Oh Shit” policy for this country. I do not think it would cost that much to have a $100000 deductible policy available for truly terrible situations, we could pay for it by a tiny gas tax or tanning bed tax or tobacco tax. There are simply not that many folks who fall under these guidelines. As for the poster who mentioned the cost of insulin going from a few dollars a month to thousands. If the government did not protect these bastard’s monopoly, there is no way this stuff would cost this much. finally to end a long rambling post. I have lost so many folks to cancer in my life, so many deaths. All of them went to the doctor, did the therapy, died horribly. Now, I know a few survivors and I know advances have been made, however based on my personal experiences, I wonder about some of these percentages that are tossed out there. “Lies, damn lies, and statistics” springs to mind. What better way to measure healthcare than by cost vs life expectancy? It seems the least biased, although I know it has its problems.

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Phil November 12, 2017, 4:52 pm

So glad I live in Canada. These posts remind me of the good things we have access to if we need them. Our system is no where near perfect but I have cost the system way more than the premiums I’ve just read about being a minimalist who is very active and lean, and has a hobby of eating clean, balanced meals. I’m not even 40. Shit happens.

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Marcus November 12, 2017, 10:56 pm

As mentioned above, I think the most important change needed is to strongly encourage savings in an HSA. When you have to “self insure” the first several thousand out of moneys that have already been saved (not assumed debt) you’ll start to see people care a lot more about their medical expenses. It’s quite amazing how quickly an HSA can grow in just a few years. As has been noted in MMM countless times, gains in wealth are positively correlated with people giving a damn about their health and happiness.

I also think that too much trust is placed in doctors to do what’s right. I don’t believe many doctors are actively malicious but at the end of the day they have mouths to feed. Iirc there are some interesting studies how doctors will have statistically higher rates of prescribing procedures that their medical offices specialize in versus referring the patient out. I believe 60 minutes did an expose on the DaVinci surgical machines years ago as an example of this.
https://www.cbsnews.com/news/the-medical-arms-race-da-vinci-surgical-robot-edition/

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Leslee November 13, 2017, 5:54 am

We also need to drastically increase the supply of medical laboratory scientists. We’re the people in the hospital and clinical labs running all of your lab tests. We are in short supply, overworked and needed everywhere. Lots of job security though.

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Evan November 13, 2017, 6:12 am

“But also remember that if you’re a high-income business owner, your business can pay for your health insurance with pre-tax money. This cuts your net cost after taxes by 30-40%, making it a subsidized program after all.”
Are there restrictions to this? Best option? Where can I find out more about setting this up for myself from my business?

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Greg November 13, 2017, 9:48 am

Has anyone explored buying individual cancer insurance: https://www.aflac.com/individuals/products/cancer-insurance.aspx?

I have not, but seems like it could be an option.

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- Tamara November 13, 2017, 5:26 pm
  
  I have a cancer plan through AFLAC because I am a Nervous Nelly where cancer is concerned. It covers wellness visits and screenings well, but fortunately I haven’t had to use it otherwise. A coworker who had cancer has been very pleased with it. I’m not sure how financially sound it is to spend money on it, but it gives me a little peace of mind.
  
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JeffJ November 13, 2017, 11:18 am

Do you believe that everyone who can get vaccines should?

One of the biggest arguments for getting vaccines is to protect those who can’t.

I will continue to pay too much for insurance to protect those who do have chronic illnesses and need it. I would prefer it to be a mandatory single payer system but until then…

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Nik November 13, 2017, 1:17 pm

Why not just check the exchange again? $900/month isn’t the only option. The Colorado exchange https://connectforhealthco.com has bronze plans for $650/month. For the $961 they are quoting you, multiple providers are offering Gold plans. I’m confused why checking the exchange wasn’t step 1 before investigating everything else you did?

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- Nik November 13, 2017, 1:18 pm
  
  I used a family of 3 with the adults ~40 years old and an 8 year old kid. Seems comparable.
  
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ZJ Thorne November 13, 2017, 9:42 pm

I own my business but still work for others, in part, to access healthcare. This system leads to overwork and toxic stress on bodies. I’m grateful that I can opt for bronze-level plans and have no dependents, but damn. It’s ridiculous. I get the best results from non-traditional healers that my insurance doesn’t cover. Seeing them is still cheaper than seeing a physical therapist with a referral. If I could save the hundreds per month and opt for catastrophic coverage, I would strongly consider it.

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Richard Newell November 14, 2017, 11:35 am

>The value of medical insurance is pretty easy to estimate: the National Institute of Health calculates that the average >person consumes about $449,000* in health care spending over an 80-year lifetime, or $5600 per year. This is less than >my plan’s deductible alone, which eliminates the value of insurance right off the bat.

Anybody here who incurs $5,600 in bills each year? I didn’t think so. I’m in my mid-forties and have yet to ever hit any sort of large deduction out of pocket max. In our early years the insurance is of little use to us so we should pay considerably less, but in our older years the likelihood of complicated and expensive procedures increases greatly.

I think the problem with insurance is that there is insufficient price competition. Where else in our lives do we go somewhere and don’t know the price of what we are buying until after the fact? At a restaurant or grocery I can see the prices. Someone planning to do work on my house or my car gives me an estimate. But in health insurance it is a giant black box.

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James November 14, 2017, 12:12 pm

This is a really complex moral manifold. I personally would keep on paying since 1. I have the capacity to and 2. if everyone healthy were to stop, sick people would have to pay so much more than they do now. This is an instance of the categorical imperative at work.

One of the big problems with our system is that we have made health insurance a vehicle of equity, when that role should really be filled by universally available government-provided healthcare.

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jestjack November 14, 2017, 1:44 pm

The premium increase is bad enough but these policies have high deductibles and out of pocket. So it is basically catastrophic insurance. The “boogey man” IMHO is prescription drugs….some of these drugs cost are out of sight.

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Rani November 14, 2017, 4:41 pm

I used to be a ‘lowest cost, highest deductible’ health plan purchaser. I was healthy, active, and working in health care. Paid into the system every year, never even used as much as my costs. Suddenly in 2011, through no known fault of my own, I developed a chronic and serious illness that cut me off at the knees. I don’t smoke, I drink rarely, and I keep a healthy weight and active lifestyle. Still—stuff happens. Big, bad stuff. That’s why we have insurance. Since then my opinions have changed on what good coverage is, as you might imagine. Now, I’m still trying to work full time, but I have had to undergo redo surgery recently, and it’s really tough. I’m close to FI… I’d be fine if it weren’t for the risk of ridiculously high health care costs and the uncertain future of the protections of the ACA. So I’m holding on, wearing myself out, and hoping to make it through til more sensible people are running the country (if that ever happens), or til I’ve over-protected myself ridiculously in terms of excess savings.
MMM, medical tourism is really risky. It depends on where you go and what treatment you get. Everyone really needs to understand that medical care is not something that you can shop around for like you might for a particular pair of shoes. You have no idea who is good and who isn’t. Cost has no bearing on quality in health care—if you go for cheap, it may be fine, it may not. Same with expensive. You have no real, legitimate way to know. Complication rates at small hospitals are lower—because they transfer the sicker or riskier patients to bigger hospitals. ProPublica data is crap—it doesn’t reflect true risk, just a doc’s ability to cherry-pick patients for higher ratings. Online reviews are crap—only really happy or really pissed off patients post. And what they say is no reflection on talent or quality of the doctor; it is a reflection on whether they liked them. Some of the worst, most incompetent surgeons I have known were well liked by their patient base, because patients don’t always know when they’ve been screwed. Every doctor is going to say they are capable of caring for you, but I can personally vouch for the devastation that happens when they are wrong. My surgeon lied—he said he was qualified to do a major surgery on me that he really was not ready for—and I am still paying the price. Now I face a massive, multi-stage reconstruction that still won’t end up normal, and it affects every day and every part of my life. I had to give up my biking/walking habit—gasp!—and go back to driving to work. The worst part was that, after this guy messed things up, I had a really hard time finding someone else to clean up the mess. That is an even bigger issue if you go internationally to get a cheap knee replacement or whatever. Cheaper doesn’t mean better in medicine—Dr. X and Dr. Y cannot be considered equivalent unless you have much better info than the average consumer. Trust me, you don’t. No charts or publicly available data sets reflect the truth. If you have a relative who works in the field, they might know—but even then it’s not foolproof. The cost is one you pay with your life and your health, so don’t cheap out.
I think the optimal answer is: make enough money relative to your needs that the rising cost of health insurance is an annoyance, not a serious stressor. You’re in that boat already, which is great, and I hope to get there one day. Why complain about something that is a drop in your bucket? I’m w Mrs MM—subsidizing health care for the less fortunate isn’t the worst thing to be in the position to do. We do it anyway—every single person with private health insurance does this. Every taxpayer does this for Medicare and Medicaid. Is it really so bad that the math is so clear for you? I subsidized others for years before I got sick, and I still generally pay more than I use, except in a year like this one. I cost more than I paid in for 2 years out of 22. (That’s years of paying into the private insurance system, not my age.) So, by the math, I came out behind. But when you are sick, there’s something comforting about knowing that the bills won’t all be yours.
If you believe in universal healthcare, you have to remember that will mean high earners like you will pay more taxes to cover that cost for all of society. It will cost a lot more than your $12k bill for the year. I am not objecting to this—personally, I think healthcare needs to be a right for American citizens. I am ok w single payer—it will kill my income between the decreased provider reimbursement and the taxes, but I can live with that in exchange for the security for myself, my family, my friends, and society at large. But it will take a chunk from people’s wealth—think taxes like Canada or Britain. I’m in favor, but most capitalists are probably not going to be.
I couldn’t make it through all the comments—someone else may have said this already—but did you think of an HSA? That is a great deal—basically, tax free contributions every year that don’t go away at the end of the year, which you can use to pay for health care costs whenever—now or in 20 years. When you sign up for your high deductible plan, you are usually eligible to set up an HSA. You can invest the money and let it grow tax free, and you owe no tax on it or the income from it as long as they are used to cover health care costs at some time in your life. It isn’t the answer to everything, but it might be the answer to ‘how does the high earner save money on health care costs?’…
Lastly—as a person who is part of our health care system as both patient and provider, I think the biggest problem is too many stakeholders who are all trying to profit. I’d like to have everyone focused on better quality care and better value, like nationalized health programs in other countries. It’s not perfect—there are longer waits and other issues. But here, hospitals are all looking for ways to game the system and make more money. Doctors in private practice are doing the same, trying to keep income up in the face of ever-declining reimbursement. Insurers want to sign people up with promises and then refuse to pay for treatments wherever they can—they are responsible to their stockholders, not their customers. Nothing is set up to really make costs decrease.
WE the investors in the stock market profit from this behavior on the one hand and decry it on the other. Hypocrisy is alive and well. Either we let the health care industry grow, with record profits and increasing consumption of GDP (leading to higher and higher stock prices and profits for us stockholders) with no better health to show for it, or we take our lumps, our decreased market returns, and our higher taxes, and decide that we’re going to do better for our health as a population. We can’t have it both ways.

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Mike November 15, 2017, 1:10 am

I have diabetes, glaucoma, and ADD. Also have a child with ADHD. Health insurance is not an “option”.
The “cost” for my 90-day supply for eye drops : $1,000. Out of pocket/co-insurance: $300.
The “cost” for my 90-day supply for diabetes meds: $1,100 for insulin, and $1,300 for pills. Out of pocket/co-ins: $720.
Family 30-day “cost” for add/adhd drugs: $550. Out of pocket/co-ins: $130/ month.
There are discount cards made available by the drug manufacturers which could lower my co-insurance/out of pocket to $300 (for a limited time only), but penalties imposed by the health insurance plan would nullify the usage of the cards.
Monthly premiums: $950/mo. for family, with a $2,500/$7,000 deductible and 20% co-pay after, max out of pocket $15k.
Family income: $144k/yr.
In total:
Premiums monthly: $950.
Drug co-pays monthly: $550-$600.
Total (not including doctor visits or any actual health care): $1,600-$1,650/mo.
Not that I’m bragging. But this isn’t sustainable.

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jared November 15, 2017, 8:23 am

We tried to tax soda at 1cent/oz here in chicago and SHIT HIT THE FAN. The big soda lobby went crazy and spent $20Million on an ad campaign. People just couldn’t handle an extra 12 cents per can of pop. It became so unpopular that they had to reverse the tax 2 months in. People would brag about driving 10 miles to the next county to buy pop without the tax-which is completely ludicrous. Of all the taxes we have, and we have a lot, this was the one that sent people into an outrage. I supported it. You can still drink it if you want, but you pay a bit more. It’s a sin tax.

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Lily H. Prudhomme November 15, 2017, 4:20 pm

We’re currently paying $900/year for insurance (per person) and it will jump up next year. Funny thing is, in our situation, that’s actually the best we can hope for. Going through COBRA would be around $1500/month per person for us. That’s more than our mortgage! I wish we could treat insurance more like a competitive Amazon marketplace too but it feels more like a far off dream.

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