Healthcare

I dare you to answer this question about health care ‼️‼️‼️

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Tell me, how much should you have to spend on health care each year (premiums + out-of-pocket costs)❓ State $$$ or % of income? 

How do you define affordable❓

I dare you‼️

Reply via a comment.

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Categories: Healthcare

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16 replies »

  1. As the readers of this blog already know, Medicare is currently “means tested” regarding the monthly premium. By the time Congress tries to put Medicare on a sustainable affordability path (at which time I’ll surely be dead and gone) means testing will be much more “severe”, “fair” or “equitable”. Take your pick, but keep that check book open.

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    • Thanks. Yes, it is “means tested” today to some extent through:
      – Medicaid dual eligible for the lowest income retirees, and
      – Medicare Part B and Part D surcharges for the highest income retirees.

      Medicare Part A funding is “means tested” to some extent because to qualify for the same benefit as everyone else, you only need 40 quarters paying in $36.54 per quarter, $146.16 per year (1.45% of $1,260 in earnings X 2) for ten years or $1,461.60! Compare that to the Bernie Sanders millionaire who he asserts doesn’t pay his fair share – $1,000,000 *.0145 = $29,000 in one year – $290,000 over 10 years!.

      Medicare Part B and Part D are also “means tested” to some extent because they are funded with general revenues, mostly income taxes, where only 54% pay income taxes.

      So, it is already a mostly progressive funding scheme.

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  2. To Benefitjack: You believe that asking the question of the percentage of income dedicated to health spending confirms your premise that perhaps most Americans believe others should pick up their medical tab if it goes over some threshold percentage? Now, don’t you go tearing an ACL jumping to conclusions.

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    • Thanks for the advice. I try to avoid breaking my arm when I pat myself on the back, too!..

      Anyway, my point is that your income (my income, other’s income), etc. bears little relationship to the cost of medical services we need – there is no correlation that clearly shows that the medical services need is less for lower income individuals or higher for higher income individuals, so, anything that suggests that the cost should be a function of income (or “affordability”) is obviously not related to need.

      If you need $5,000 of care in 2016 and I need $5,000 of care in 2016, what difference should (that’s the word Dick uses) it make that our incomes are the same or different. I need a flight from NYC to SFO, so do you, chances are we won’t pay the same price. Using the word “should” suggests that we are trying to right some wrong, that different prices for the same services are wrong, or that the same prices for the same services are wrong where our incomes differ.

      Just not sure why health care/’insurance should be priced differently based on differences in income; and if so (and I don’t agree), shouldn’t the cost be based on cumulative, lifetime to date earnings – versus current year earnings or some other shorter period which adds inequalities. Why shouldn’t the cost each of us pays be based on our actual usage of medical services?

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      • If you and I go out to buy a car, which car we buy indirectly, but not absolutely, depends on our income. Presumably one person buys a Mercedes comfortably and another’s buys a Ford. Or even if their income does not support it, some people may buy the Mercedes.

        When it comes to health care those choices do not exist for all practical purposes so the affordability of health care does, in fact, depend on ones income. If two people need a heart transplant, should the person with income or wealth in the lowest 20% pay the same as one in the top 20%? Does it really matter if we are talking about the cost of care or the insurance premium?

        Frankly, I don’t know how to deal with this under any system if we don’t subsidize one another.

        When I was managing plans there was no adjustment for income and thus the lowest paid worker paid exactly the same as the CEO; fair? For retirees I changed the system so that their premium is based on a combination of service and base pay at the time of retirement. The dollar amount will change based on rising costs, but the % paid does not.

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      • I don’t believe in being fair. In the plan sponsor role, I believed in being equitable – treating similarly situated people the same and differently situated people differently.

        No, when it comes to cars, I drive a 2006 Hyundai Sonata with 272,000 miles, even though my credit is such that the Mercedes salesperson would love to see me walk in the door.

        However, I disagree that choice is not available when it comes to health care. For example, over 10 years ago, I started to participate in my HSA-eligible HDHP, and my wife and I have now accumulated almost $70,000. Yes, we denied ourselves a Mercedes and a lot of other things along the way. But, we choose, we prioritize everyday, every year. So do you and everyone who reads this blog.

        Only a few Americans never had choice – those who were disabled from birth, or those who had congenital medical conditions (and even those folks with congenital medical conditions may have had access to positions with employers whose coverage did not have preexisting condition exclusions).

        No employer plan has a preex today. So, if two people need a heart transplant, assuming they prioritized their spend all their lives, they should both be reasonably prepared to defray the out of pocket costs – which, today, “thanks” to health reform, are a maximum of $6,850. And, the choices are only getting better. Just think what you and I could have accumulated in a HSA had such options been available all of our working lives (as it has been for my children, today age 31 and 28).

        It isn’t a question of subsidizing each other, it IS a challenge of financial preparation and maintaining adequate insurance. Those ARE choices. Those are deliberate decisions.

        You mention that the lowest paid worker had the same contribution rates as the CEO at your firm. No, that is NOT fair. Fair means treating me as I would like to be treated. And, no, it is not equitable either – and it certainly is not proportional to incomes – but you misunderstand, the baseline for comparison is not the employee contribution, but the employer contribution. The lowest paid worker was probably grateful to have access to full family coverage; while the CEO probably only covered herself (or maybe herself and her spouse). So, 5+ years ago, the low paid worker probably received $12,000+ in employer financial support, while the CEO only received $4,000+. And, that is only the difference in nominal dollars. As a percentage of total rewards, the employer financial support for the lowest paid worker was probably 33+% of their wages, while it was < 2% for the CEO. No, it wasn't even equitable.

        With respect to retirees, I assume your contribution based on a combination of service and base pay was – lower service paid more, and higher base pay paid more, so those with short service and high pay paid the most. So, given the defined benefit pension plan probably had a formula that was a function of participation service and compensation, your retiree medical contribution may not have been proportional to a person's ability to pay in retirement – either.

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  3. Choosing a high deductible health plan this year, I will be expected to pay $9820 out of pocket, which includes my share of the premium and the maximum out of pocket of $9400. This is a single plus dependents plan offered by my employer. It is the equivalent of 15% of my gross income.

    How much should I or others be expected to pay? That is a difficult question. I do know that I am aiming to pay much less than the $9820 I am expected to pay by working at staying healthy- healthy weight, good nutrition, not smoking, exercise, etc.

    How much should those who choose to be obese, inactive, smoke and abuse alcohol be expected to pay?

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    • Hope you are funding an HSA with your premium savings. What will you do if you are unfortunately hit all at once with a very large health care expense?

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      • Most assuredly I am funding an HSA, maximizing my contributions to this plus adding the catch up contribution of $1000.

        My biggest fear is not necessarily being hit with a very large health care expense but being hit with a catastrophic health issue that would occur the last month of the benefit year and extend into the first month of the next benefit year. That would mean maximum out-of-pocket two months in a row!

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  4. 10% baby! Just ask the Democrats.

    The fact that you/others think it should be a function of income tells the whole story – unlike housing, food, cars, etc. – like people are entitled to use other people’s wealth to keep their costs to a reasonable percent of income.

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    • Who said that? I asked for dollar amount or percentage of income and one person commented a dollar amount and another %

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      • The fact that anyone asks for a percentage of income is the issue … obviously confirming that some, perhaps many, perhaps a majority of Americans believe others should fund the cost of medical coverage and services to the extent it exceeds a specific level of personal earnings. That was/is a major component of PPACA – and the unfullfilled promise of “affordable, quality care/coverage”.

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  5. Good question, which I have thought about recently as I have started on a new medication that is kind of pricey (my monthly co-pay is $210. )

    I will be retiring at the end of this year, and figure that total medical spending (insurance premiums, co-pays, drugs, etc.) as a percentage of my and my wife’s combined retirement income will be about 11% in 2017. That is barring any unforeseen medical condition. When you consider that health is needless to say an important part of life, I think 11% is very reasonable.

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    • It has to be income based, no more than 15%. $8K would be 40% of my income. I am 60 and have spent less than $1,000 in out of pocket healthcare cost in the last 20 years. About 10 office visits. Many years I would have no reason to go see a doctor.
      My basic lab tests numbers have not changed since age 35. I am on 1 medication now for edema and high blood pressure. 1 25 mg pill per day costs me $2 copay per month. Insurance pays $10. I check my BP at home and see the doctor twice per year.

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      • As a point of clarification, when I said $8K a year for me is reasonable, that is just for me. It does not include my wife or her health care premiums. It does, however, include my Dental Ins. premiums. $8K a year represents approx. 8.5% of my pension.

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