Observations on life

What we can afford and what we can save?

You have heard it endlessly, my health insurance deductible and co-pays are unaffordable. I can’t afford to save for retirement!

Our perception of what we can spend (afford) and how we spend our money is distorted toward instant gratification and pleasure in general. $100 is $100 no matter how it is spent, but ask the average American and you will see many don’t feel that way.

Advertisements

5 replies »

  1. Just as a reality check, I can verify that $37k is a valid rate. My retirement insurance through my self-insured ex-employer costs $35k of which I pay 15% of those premiums. My total out of pocket and premiums amounts has been almost $7500 and I have two months to go. I know that does not help. If I had to pay for everything myself, like you, it would be 58% of my income. I don’t like it either.

    But healthcare is not a right. Living forever is not a right. Eating is also not a right in the US Constitution and if it was, would it mean eating rice or must the government provide everybody lobster? Does the government set your broken bones at age 50 or a give you hip replacement at age 90 which in theory is currently possible? Modern miracles that are extending life are also driving up costs. In the private insurance markets, people demand the miracles but do not realize the costs.

    I agree with the post. Don’t complain about not being able to save if you use payday loans to take a holiday. If you used the money that you would have to pay back for the payday loan was saved instead, just for a few weeks longer, you would have more money to spend on that vacation instead giving it away in for a very high interest rate product. I don’t like payday loans but they could serve a purpose for the working poor, like get a car fixed so they can get to work, but not for a vacation.

    Like

  2. Jaime, I think you should at least look at the health options in the public exchange. May well be that your COBRA is the right answer, however, that is not typically the case. In most situations, because of taxpayer subsidies, individuals typically receive better coverage at a lower cost by enrolling in a public exchange coverage option.

    I have frequently discussed the issue of affordability with workers and employers. A frequent topic is the perception that many workers are financially incapable of saving for retirement.

    Certainly, studies show most Americans live paycheck to paycheck. However, payday-to-payday living is not a barrier to saving – many who live payday to payday are saving for retirement. Others cite out-of-pocket medical costs or student debt as barriers. However, some recent studies show those aren’t a barrier for most Americans, either. Consider:

    (1) The median annual out-of-pocket medical expense was $264 (2015), a very small portion of medical spending, and
    (2) A minority of households have student debt. More importantly, the median monthly student loan payment was $203 (Cleveland Federal Reserve Bank, 2016), and
    (3) Out of pocket spending has declined from 34% (1970) of all medical expenditures to only 10% (2016)

    So, most workers have minimal out-of-pocket medical costs. Fifty percent of Americans account for less than 5 percent of all medical spending. In other words, medical spending is concentrated among approximately 5 percent of Americans who account for more than half of all medical spending. Most are retired or disabled. And, more than 95 percent of all workers have either no student debt or student debt that is manageable and budget-able.

    The bottom line is that those financial challenges are not a barrier to most workers.
    .

    Like

  3. The point was simply that many people spend money and go into debt via unnecessary spending while complaining in that necessities are unaffordable. That’s a very high combination of premium and deductible. You say you woukd nit take an Obamacare plan, why not? There is no difference in the coverage from private coverage once you select a plan. Why not get the best deal you can?

    Like

  4. Not sure what the intent of this post was…I am starting the search for my health insurance coverage options for next year. I work for a Canadian company, and they don’t offer the 5 U.S. employees, health insurance or 401-k, etc. In march I’ll loose the Cobra coverage I’ve been on for the last year (been paying $1000/month for it, $12,000/year household deductible). I can tell you that I make too much money for the Gov’t subsidized option, and I wouldn’t take it anyway. Coverage for me and my life-partner will be around $2,000/month, with deductibles in the range of $7,500/person – $13,000/household. Now, I’m not sure what you suggest reasonable health-care cost should be, but $37,000/year sounds a bit un-reasonable to me…Without putting any blame on anyone, something has to be done to make this issue manageable, affordable and reasonable to the U.S. population…

    Like

What's your opinion on this post? Readers would like your point of view.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s