Navigating medical insurance without Obamacare
By David Swink, FCTA Board Member
As a software consultant, I've been in and out of full employment (and hence full medical insurance coverage) for years. Having recently turned 65, I've just gone through the unpleasant experience of educating myself about Medicare and what, if any, additional coverage one might need (as you won't find a coherent explanation of your options on the Internet).
After noting that I'm reasonably healthy, let me describe the system and how I've navigated it:
(1) The average employer-sponsored premium for a family of four costs close to $13,000 a year, ranging from $3,300 in Utah, with minimal insurance regulation, to nearly $17,000 in Massachusetts, where insurance is highly regulated. These "benefit" costs are of course deducted from the salary your employer would otherwise be paying for your services.
(2) The birth of my two children was probably the most expensive of medical insurance I've utilized thus far. Other than my kids suffering a few broken bones during their childhood, our family has incurred no expensive treatments, and the insurance company has generally come out on top, which is how they make money. The kids are now grown and on their own, while my wife is still working and has always had her own insurance.
(3) During those times between jobs, COBRA was always an option offered by my former employer. However the premiums always seemed excessive considering my state of health at the time, so I always declined the offer. I've thus far had no cause to regret this course of action. I've just completed seven full months of unemployment, with three dental visits and a normal checkup with my eye doctor.
(4) I've always assumed that I am ultimately responsible for mine and my family's general welfare. Given the ups and downs of the job market in my chosen profession, my strategy is to build a reservoir during the good times to carry me through the bad times: I paid off the mortgage on my house in five years. Since my wife has remained employed since before we were married, I considered life insurance a luxury I could easily do without. Since the kids have left the nest, I've also cancelled my house insurance, especially as the premiums recently became exorbitant. I always keep at $30,000-$60,000 readily accessible for large expenditures such as a very occasional new car and of course an accident or other major expense. Life becomes a lot simpler and less stressful when you identify what you consider "reasonable risks" and keep enough "in the kitty" to cover these contingencies -- in other words, provide your own insurance and forego the middleman.
(5) I keep past medical and dental insurance statements from procedures that were covered when I was insured. Then when I'm not covered, I negotiate with the doctor, hospital, or clinic for a price resembling what my old insurance company negotiated, plus my co-pay, and then maybe I throw in another $20. Providers are generally quite willing to accept a check, and forego the overhead they would have incurred if I had insurance. If Obamacare goes into effect, we will have lost the freedom to be frugal and provide our own insurance as I've just described.
(6) Now that I've attained Medicare eligibility, my game plan has only slightly changed. I've signed up for Part B medical coverage only and am thus covered against future major medical liabilities. I'm not a fan of the Medicare system, but I've paid into this system my entire working life, so I am certainly entitled to whatever the system provides. However, if I am allowed, I plan to pay the $100/month (and increasing) Part B premiums but merely use Medicare for catastrophic coverage. Doctors hate Medicare because of the paperwork involved and the low reimbursement rate. They prefer that you pay an extra $125-$160 per month for "Medicare supplemental insurance", which pays them better and more promptly than Medicare alone, and also covers your annual deductibles (currently $135 for medical and $1050 for hospital stays). But the money I'd save by not paying for a supplemental plan is money available for paying the doctor directly at better-than-Medicare rates, and we're both better off!
I've simply described how I personally have done my own risk analysis and determined that I can easily cover my medical obligations without a formal (and expensive) insurance policy. I recommend that other people in similar situations consider their own current and projected state of health, and conduct their own risk analysis and course of action -- like quite different from my own.
We live in interesting times, financially and politically. The individual freedom we currently enjoy to make our own insurance decisions may be collectivized in the near future, and we'll live in a "Brave New World".
Interesting times indeed.
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