484 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.

 

 

 

 

  • Christine K November 16, 2017, 10:03 am

    Really dumb question, but assuming you are still Canadian citizens couldn’t you just hightail it back to Canada and get free healthcare? If so, I’d just self-insure and assume that even in an extreme case (bad accident, serious illness), I could pay out-of-pocket to be stabilized in the US and then pay for transfer to Canada to get ongoing treatment. Assuming you could just pay for CHIP for your son (you can do that here in FL at any income I believe), I’d self-insure the adults if I had universal healthcare in Canada to fall back on.

    Reply
  • SoCalGirl November 16, 2017, 2:33 pm

    Take heart. Amazon is about to launch full blast into the pharmacy business. Only a matter of earth minutes before they launch into full medical…

    Reply
  • Acastus November 16, 2017, 3:29 pm

    I do not think the FIRE community is doing a good job of evaluating the cost of health care. If there is no inflation, insurance premiums in your 50’s will be 3 times what they are in your 20’s. That is the current cost structure. That is how the ACA works now. Even assuming it will be there for you is a big if.

    Do you want to self insure? If you have millions, it is possible, but is it worth the risk? Your family is not a big enough population to dilute the risk. It is probably cheaper to pay the $11k per year against the small risk of incurring $ 2 million in medical costs. There are many personal behaviors that can reduce the chance of getting a variety of diseases, but there is still a non-zero chance of catching or developing expensive medical problems, no matter how perfectly you live your life. There is more to health than avoiding accidents, smoking, and high cholesterol. The chance of cancer, muscular dystrophy, and a host of life changing, costly conditions exists for all of us.

    Reply
    • Florida Mike November 19, 2017, 9:19 pm

      True but then why not just do like so many others are doing and risk it and then if the worst does happen, just default on the payments and they set you up on a plan where you pay $100 a month for the rest of your life. Sounds like irrational thinking but from what I do, I have seen at least 50 people in the situation and they are laughing at those of us that pay into the system.

      Reply
  • Grogounet November 17, 2017, 4:26 am

    This article seems like my life:
    1/ Make all research
    2/ Make a decision
    3/ Talk to wife
    4/ Make the opposite decision

    Reply
    • Daniel November 22, 2017, 11:10 am

      “I went to the store to buy a new dress, but when I got there I saw these BEAUTIFUL sandals. So I bought this purse!”

      Reply
  • Emily November 19, 2017, 8:35 pm

    MMM,
    Do you worry about not having health insurance (as you seem to be considering) and riding a bike in Boulder County? It’s a bit sketchy around here lately for bikes. Even walking around here not that friendly anymore. Yes, cars to blame. But also the commercial/residential imbalance. Boulder basically becomes a parking lot during the day. Not sure how to solve it because I’m sure many commuters into Boulder have multiple stops on the way home-picking up kids and what not. In fact, pretty sure they leave Boulder because they have kids and single family housing for families basically non-existent in COB.

    Reply
  • Florida Mike November 19, 2017, 9:15 pm

    Very timely article as I am having to make the same decision right now. Along the lines with the fact the provider I have (I won’t mention the name to avoid corporate bashing) provides the worst customer service I have ever seen!

    I am honestly thinking about dropping coverage and self-insuring. The wife and I are healthy and the penalty is only $2600 per year yet we are spending $12k per year for a plan with a $14k deductible and after hours and hours of talking to folks, have been told thats the cheapest available based on what we make and our zip code.

    I’d love to hear other options if there are any. Personally, I am fed up with being bullied into health insurance that I feel won’t be there if I need it.

    Reply
  • Livingalmostlarge November 20, 2017, 12:20 am

    Mm how do you know the rate increases aren’t due to you becoming older and the insurance company deciding you are a worse risk?

    Reply
  • Florida Mike November 20, 2017, 5:55 am

    So it appears (and from what I have been told) your insurance premiums are based on your income.

    So why not just misreport what you make when looking for insurance? I don’t mean below the $47k threshold to get subsidized insurance but say if you make $100k why not just say you make $50k to get lower rates?

    Of course this is unethical and maybe illegal but does the IRS and the insurance companies actually cross-network their information?

    I don’t condone this but of course I would do this before I went without insurance and put my family at risk as I imagine the worst you could face is a fine and a penalty if ever caught and it would still be below the outrageous rates of the insurance premium as I doubt anyone will get locked up for this.

    Reply
  • Florida Mike November 20, 2017, 11:21 am

    So here is what I am considering after some extensive research…

    Signing up for short term coverage that keep renewing. The Exec Order signed in Oct is geared towards making this legit so I won’t have to pay the IRS penalty. Even if that doesn’t work out, the premiums I found are far less than the current plan I have.

    I found out my current plan is the ONLY company available in the county I reside in Florida so thats why the premiums are so much and the customer service is so poor. Yet short term plans are available and the agent says they provide more or less the same coverage for less costs. The only drawbacks is I have to keep renewing them ever 90 days and they may or may not meet the need of the ACA IRS requirement.

    Yet the quote I received today is HALF of what I am currently paying so I am going to go for it.

    Reply
  • Andrew Mullen November 20, 2017, 1:48 pm

    Simple, focus on these two things

    1) Global benchmarking and adopting best practices.(We don’t have all the answers here in the US, we just think we do).

    2) Transition to healthier, more active lifestyles (our lifestyles have become far too convenient and we’re suffering).

    Reply
  • Sara S November 20, 2017, 2:39 pm

    MMM, I had to have this exact same debate with myself just last week. I’m a single mom of a 5 year old boy, moderate income, still 15% tax bracket but above the limit for subsidies or CHIP. I finally reduced my expenses low enough that I thought I could start contributing the full $18,000 limit to my 401k. My employer is very small (20 employees) and our health insurance options are individual ($85/mo) or family ($620/mo), no option for individual +1. Last year, I bought an ACA plan for just my son at $157 with a $2000 deductible. Every company but one pulled out of our state. The “replacement” plan was $487/month with a $6500 deductible for one 5 year old child! I couldn’t believe it. Between the two of us, we’ve gone to doctor 4 times since his birth outside of his well-child visits. Staring at the option of spending $7,000+ in annual premiums at the direct expense of my reducing my 401k contributions or going without insurance and just paying the $1200 penalty really had me thinking. I was furious. Frustrated and annoyed. Felt like I was getting bullied. Eventually I calmed down and realize like you that I have to bite the bullet and just pay for it because what if cancer or an underlying disorder is found and ACA/pre-existing conditions IS repealed. Then I’d be screwed for the life of the disorder. I still feel defeated. It took me 2 years of paying extra to debt to free up the income needed to achieve $18,000 to my 401k and right when I’m able, I get smacked with another huge expense that keeps me down.

    Reply
  • Charles November 20, 2017, 9:26 pm

    Dear MMM,

    Have you looked into using your blog / soap business income to setting up a qualified small business health re-imbursement arrangements

    It looks like the best choice, for self employeed business owners basically combining self insurance and health insurance.

    You can pair it with an HSA and just use the HRA for premium payments for aca plans and the same stuff covered by a limited purpose FSA.

    Reply
  • Troy November 21, 2017, 12:12 pm

    The people throwing comments about system-rigging and rich capitalists exploiting it miss the mark by a mile.

    The government is the largest buyer of healthcare in the country and essentially the price-setter. If Medicare covers a drug or procedure and agrees to pay $100K, what ability do insurers (or private, cash-pay Mustachians-hypothetically) have at negotiating a discount?

    If you think single-payer is the solution, the good news is America is at least 2/3rds of the way there, but given that premiums have been escalating more rapidly the higher government-pay-share has gotten… I would be careful about what you wish for.

    http://www.pnhp.org/news/2016/january/government-funds-nearly-two-thirds-of-us-health-care-costs-american-journal-of-pub

    The most insightful comments I’ve read are by MMM and those bringing up the really tough points, such as end-of-life care (spend more on elderly than young), lifestyle diseases, and costly experimental medications that don’t cure anything.

    Reply
  • eric November 21, 2017, 12:41 pm

    When you write, ” the average person consumes about … $5600 per year. This is less than my plan’s deductible alone, which eliminates the value of insurance right off the bat”–this seems off. The annual cost you cite seems to be for an individual, and if I’m understanding right you have a family of 3.

    Reply
  • David November 22, 2017, 8:35 am

    As a healthy, slender, 60 year old I can tell you that eating right, not smoking, and not being overweight still does not mean a person will not have problems. It’s a lottery. I’m having retina issues in both eyes. I’m having lung issues and never smoked anything. Yeah, I don’t like paying for my insurance, either, but I need it because the odds of something awful happening definitely increase with age.

    Reply
  • kindoflost November 22, 2017, 12:54 pm

    I am about to signup with this “Healthshare Ministry” that I found after a lot of googling alternatives: https://www.chministries.org/programs.aspx Their “bronze” option is $45 a month so it is cheaper than the penalty. Problem is that the deductible is $5000 per incident and maxes out at $100000.
    Still it beats paying the penalty. I am only waiting to decide whether I should join now to cover the last two months of this year or wait until April using the 3-month’s gap allowed (is it 2.9 months?).

    Reply
  • BestPal November 23, 2017, 12:52 am

    To some, this may sound counterintuitive at first: insurance companies are interested in paying more for procedures, visits and drugs, and NOT negotiate lowest possible prices! Here is why: insurance companies’ profit is a difference between what they collect in premiums vs. what they pay out in claims legally limited by percentage.
    Let’s say the law allows their cut to be 15%. Thus the more they pay out this year, the more they can legally collect in premiums on forecasted payouts for next year and medical industry is only too happy to charge more. Insurance companies’ cut in % stays the same but equates to more profit year over year. All of that is done by keeping consumer in the darkness about real charges – all we care about is our co-pay, naturally. So goes up the hidden cost of medical care and up and up goes insurance. Single payer is the only solution to this problem, otherwise you can’t separate profit interests of hospitals from those of insurance companies; they are in bed together.

    Reply
  • Kris November 23, 2017, 3:26 pm

    While I usually completely agree (or close to it!) with Mr Money Mustache, this one much less. The points made are all valid, but overall I feel it’s far too narrow a perspective.

    Health problems of one sort of another are not just likely but are practically guaranteed – it’s unknown when, how severe, and how much the particular problem might cost to treat. Eating healthy & getting plenty of exercise certainly reduces risks, dramatically even – but that’s only one part of the equation.

    I’m very healthy & active and think it’s unlikely I’ll have any major medical problems any time soon. But I’m not naive enough to think it could never happen. I don’t take my excellent health for granted, because, only part of it is in my control. The rest is just good luck, and luck can be capricious!

    Am I going to stack my odds, by staying as healthy as I can? Of course!! And I’ll enjoy doing so, too. =) Am I willing to trust my financial stability to my continued good luck, if I have a reasonable way to NOT take that risk? No, absolutely not. I worked hard to achieve it and I really wouldn’t want to start all over. And I’ve had too many friends & family in that same “very healthy & active & optimistic” boat (even more so than me in some cases) – until all of a sudden they weren’t.

    I’ve known enough uninsured people, well enough and for long enough, to feel that I have a reasonable to very good understanding of the risks of going uninsured (at any age, but even more so the older you get of course), and to know that I prefer not to take that gamble. I have a HDHP to keep my premiums low(er), and since I have a cap (that I can easily afford) on my yearly out-of-pocket expenses, that means if I’m unlucky and have a major (or moderate) medical problem, it won’t ruin me financially. I also can readily afford my monthly premiums – but if I couldn’t, thanks to the ACA there is assistance available for that.

    But, what if I never end up really utilizing my health insurance? Well if so, that’s FANTASTIC! It’s the best possible outcome! It means I’m still healthy & happy – and more fortunate than many people. Does that mean I’ve “wasted” my money on premiums? No, not at all. I view my premiums as doing good both by insuring ME “just in case”, and also by being part of the insurance pool that helps other people who, right now, do need it.

    What if I become so rich I don’t need it? Well, that’s even better, I could simply participate in whichever health insurance plan was run by the company that spends the largest % of their income on actual health care expenses, or whoever spends the least on lobbying, or etc.

    Reply
    • Mr. Money Mustache November 24, 2017, 7:56 am

      Right Kris – I agree with the general thought, but surely there is a limit to how much you should pay for insurance. As I said in the article, is $10,000 per month reasonable? How about $1 million?

      No, because the cost of an uninsured medical incident is not “Infinity”, it’s just “high”. And insurance has some value, but not infinite value.

      With this article, I’m trying to get people to think in less binary terms. Some of the comments seem to imply, “YOU BETTER HAVE INSURANCE NO MATTER WHAT, BECAUSE HERE’S A SCARY STORY WHERE SOMEONE SPENT A LOT OF MONEY ON AN UNEXPECTED HOSPITAL BILL!”

      I think a better decision process is, “How much does the insurance cost, what is the likely and worst case scenario, and how shall I place my bets?” Ideally, decisions like this are all spreadsheet and no emotion.

      Reply
  • francisco aguirre November 23, 2017, 6:28 pm

    Medical tourism is the way to go.
    Check the hospitals in Monterrey Mexico, with international airport and 2 hours drive from Texas (mind you if you cross the border do it in Laredo for safety reasons).
    It has hospitals on par with the best of the world at half the cost (search Zambrano Helion, Doctors Hospital, Oca Hospital, Christus Muguerza or ITESM San Jose Hospital.
    Get a medical inshuranse in Mexico with coverage in the US. You get the best of both worlds

    Reply
  • Bill Volstad November 24, 2017, 12:36 am

    Sorry. I don’t agree with your risk analysis. We’re FIRA, and retired in out mid 50’s, and out of the blue,my wife had to have emergency aortic valve replacement. $250K, with complications. Health insurance is not an option, in my opinion. These things come up without warning. We all need to protect our selves from being financially drained B4 we get to retirement.

    Reply
    • Mr. Money Mustache November 24, 2017, 8:01 am

      Sorry to hear about that heart scare Bill and I hope she is doing well now!

      It sounds like health insurance works for you. But my question is, “How much would you pay for it?” – instead of saying “Not having it is not an option”, surely you have a limit?

      Reply
  • Michael Dinich November 25, 2017, 10:38 am

    Hello Mr. Money Mustache

    Did you talk to a tax advisor about reducing your Modified Adjusted Gross Income (MAGI)? The Afordable Care Act subisidy is based in MAGI with no asset tests, as such anything don’t to reduce taxable income will also reduce out of pocket insurance premiums.

    There’s numerous viable options, such a setting up various types of pensions, 401(k)’s, hiring children, or even a S-Corp. Even if you income is so sufficiently large that it’s impossible to get MAGI with ACA limits, the savings alone of reducing taxes likely would pay for the premium increase,

    Reply
  • Mary Lynn November 27, 2017, 6:08 am

    Thank you, MMM, for exploring this topic. I’m new to your blog so I don’t know if you interview experts to help get insight into this monumental issue but I will recommend one to you.

    Her name is Jennifer Daniels and she is an MD. She was “shown the door” because she refused to prescribe according to the Standard of Care and would not recommend unnecessary tests.

    She now lives in Panama and has an internet presence using interviews and her audio blog to help people understand how dangerous our “health care” system really is. Once you understand that the current system kills more than 800K people every year, not because of incompetence or negligence, but following the carefully crafted Standard of Care, you realize why Dr. Daniels says the most dangerous thing any American can own is health insurance!

    Why? Because owning health insurance drives one toward the very system designed to harm you. (“I’ve paid for it so I might as well use it”)

    Her wisdom is too extensive to give you the full flavor but one tidbit is her recommended strategy for protecting yourself should you find yourself inside the system due to an acute issue or injury. It involves the document we are all asked to sign if we choose to enter the door – the Admission Form. If you sign that document you essentially are giving the institution carte blanche permission to do anything and charge what they wish. They also then have permission to tap your assets if need be.

    Dr. Daniels will tell you which portions of that document to cross out and what words to place instead so you are only agreeing to pay for procedures you actually want and for which you can pay. You also are protected from being financially ruined.

    More than that, she is an insider who isn’t afraid to help people take their health into their own hands and treat themselves at home in a sensible and affordable way.

    Google her, interview her, learn from her. She’s awesome!

    Reply
  • BluesMahal November 27, 2017, 7:23 am

    I am sure we’ve heard about the single payer in this thread of comments. However, it may take me a couple sit down sessions to get through all the replies. Two things: 1) lots of administrative costs going out the window as our insurance companies are as inefficient as a 1971 Ford LTD. Guess who picks up that tab?
    2) More of a question here, if you choose to live on the road in the US, what the hell kind of insurance is one supposed to get? What a crock all around!

    Reply
  • Justin Park November 27, 2017, 9:38 am

    I know it’s fashionable to say health care is too important to leave to “big business” and even MMM here suggests “Treat health and fitness (rather than medical treatment) like a human right” but I think the only way things are going to get better is to open health care up to innovation. Treating it like human right invites government control of the industry and their track record frightens me. Ever wonder why the geniuses in Silicon Valley don’t touch health care? Because the industry is so hamstrung by regulation that cements the insurance company role that there’s no room to do anything innovative! The MMM community is full of bright people who could apply good old-fashioned American ingenuity to this problem. But it’s essentially illegal to do so. And the only solutions I hear proposed involve some other monopoly on healthcare whether it be by insurance megacorps or by pining for some “single-payer” a la Scandinavian/Euro countries. But who in 2017 still thinks that a monopoly is a good way to spur innovation? So if you’re going to call your Congressman, please just tell them to get out of the way.

    Reply
  • Chad Corbett November 27, 2017, 11:41 am

    This is SUCH a good post. I went through the exact same emotions last week and I am 90% sure I’m going with a health savings account and catastrophic insurance. I’m really surprised you didn’t consider that as an option. As I understand it (and I have a meeting today to confirm all of this) you can put pre-tax money into a designated account (and I’m pretty sure that can even be an investment account so you can by index funds with it) for health spending only and if you don’t spend it, it just accumulates and after age 65 you can withdrawal from it for any reason. Kind of like a 401k with health incentives! Am I missing something here? What is your take on HSA paired with a catastrophic policy for the “just in case” scenarios???

    Reply
  • Samir November 28, 2017, 11:36 am

    For most of my life, I didn’t have health insurance. Even when I worked for a company, I didn’t take their health insurance (and kept my money!). The few times I got sick, I paid out of pocket–and it still never amounted to how much I would have paid via insurance. I planned to keep it this way and get some sort of catastrophe insurance for if something big did go wrong. But ultimately at such an event, I was going to decide if I wanted to live anymore and make the choice to live or die just then because ultimately we all die anyways.

    Then I got married.

    We’ve been spending over $1500/yr (I know, not much at all compared to the amounts discussed here) for the last few years for ABSOLUTELY NOTHING! We’ve not had time to go for any preventative care, haven’t had any health issues, and yet have wasted over $6000! I started running the numbers based on our plan and what the insurance companies get paid–it basically came out to $1700/yr no matter what, FOR EVERY PERSON IN THE UNITED STATES. I can’t for the life of me see how this type of mass extortion is legal–it’s akin to forcing everyone to use AT&T to have a phone line or else. It has been challenged in the Supreme Court and was upheld as being legal. But it is breaking down and I believe soon will be gone. Will something worse come up in its place–don’t know.

    But all that being said, if something happens to me or my wife, the emotional stress alone would be well above the insurance premiums, so it’s a safety net for our life together. Sure, one day each of us will die. But the hope is that with insurance, we can postpone the inevitable and enjoy our short time together on this Earth.

    For anyone that gets to FIRE, consider moving to another country in the later parts of your life where health care is needed. You will be way better off as here in the US they are sneaky and try to take advantage of whatever they can to get the insurance company dollars (which were your dollars). I have a sister-in-law in Canada and actually have fallen in love with parts of that country even though I was born in the US.

    Reply
  • Ken November 28, 2017, 6:22 pm

    I don’t understand everyone’s continued support of ACA insurance. In my experience it is cheap, (we pay about $400/month for a Silver plan for a family of four, after our subsidy is applied), but completely useless, as NO LOCAL DOCTOR HERE IN CENTRAL GEORGIA ACCEPTS IT! What’s the point of health insurance that won’t pay for anything?

    The health care system is so screwed up in this country that I would expatriate, if my wife would go along with it. It’s a big world out there; no need to let yourself get screwed over by a corrupt system.

    Now if you don’t mind, I’d like to try your patience for a bit while I put on my tin foil hat and spout what may be utter nonsense. For a country as rich and prosperous as the USA to have such a burdensome health insurance system CAN’T POSSIBLY BE ACCIDENTAL. I believe that healthcare, and it’s crazy costs, are being used to keep us under control. As has been alluded to in many of the prior posts, FEAR locks us into this mess, just as effectively as fear of going to Hell locked people into the powerful religious organizations that controlled much of society until just a few centuries ago.

    Reply
  • Nick November 28, 2017, 8:47 pm

    There is truth in the fact that terrible things can happen no matter how well you plan and take care. That is what real, old fashioned insurance is about. Now, hold for drum roll, it should cost practically nothing. Despite knowing plenty of people who have had catastophic healthcare scares, I know plenty who have not had any. Once you reduce your chances significantly by leading a healthy lifestyle, the cost really drops! I used to have health insurance like this, big, big deductible, but family of four for $200 per month. This is reasonable risk/reward cost at current pricing of everything else (except healthcare) in the world. Health insurance is for big emergencies. If it is treated like that it keeps the price down. Ridiculous costs for prescription drugs and chronic illness treatments are a racket perpetrated by a protected guild system. The government protects this guild. It is as far from free market as anything can be. If we want to protect the desperately sick with a government insurance company, that is one thing, but allowing the alliance of government and protected big business to dictate a completely unreasonable price because “We might get sick” is total rubbish.

    Reply
  • Derek November 29, 2017, 3:45 pm

    I don’t like the idea of a sugar tax because essentially it is a sin tax with government telling people what to do.

    Instead, the government should stop subsidizing big food agribusiness that include both the sugar industry and the meat / dairy industry. This would decrease the supply of unhealthy pre-packaged processed foods and processed meat products that are clearly damaging to our health.

    Healthier foods like fresh, organic produce should be subsidized. The United States population would be healthier with less incidence of cancer, heart disease, and diabetes by reducing the consumption of junk food, processed food, and processed meat products.

    Reply
  • Sean Cunningham December 1, 2017, 1:55 pm

    “- 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.”

    These two points. Good gravy, but the arbitrary restriction of medical knowledge providers drives me crazy. We have a shortage of providers in this country, and we do nothing to resolve the issue.

    Reply
  • Pat Connelly December 1, 2017, 3:58 pm

    I have had my fair share of positive and negative health care experiences: a torn ACL, a torn shoulder socket, and high blood pressure at 23 yrs old. I have also witnessed the complete lack of healthcare reform and progress, but both sides. I can’t take it anymore. I like action, so I created a fully formed model on how to move healthcare forward – The Citizens Healthcare Rights Act. Love your feedback

    https://medium.com/@Corevity/a-citizens-healthcare-bill-proposal-8536cd403d33

    Reply
  • Bill December 4, 2017, 10:26 am

    That KP Bronze plan has 50% coinsurance. It is literally garbage and the worst plan in Colorado. The Bright Health Bronze costs a few bucks more and offers 100% after the deductible which is about the same (7k individual 14k family likely). If you wind up in the ER and hospital for a few days or weeks on that plan, you’ll be on the hook for half. Might be worth thinking about.

    Reply
  • Melissa December 5, 2017, 5:13 pm

    You are exempt from the Federal tax penalty if coverage is considered un-affordable — The required contribution is more than 8.16% of your household income. So, If the cheapest plan in your area exceeds 8.16% of your income than you just fill out Federal form 8695 part 3. The cheapest plan in my area is $1300/mo for family of 4 on a Bronze plan with a $7000 deductible and no benefits kicking in until deductible is met. This is the point when I say enough. I am going to try the Liberty Healthsare plan. I also may join a local Direct Primary Care Clinic. You have one in Boulder http://www.cloudmedical.io/.

    Reply
  • Rich December 6, 2017, 3:57 pm

    14 Ideas to expand on MMM’s Ideas for making US healthcare less expensive
    * Establish a national health policy to measure and improve the quality of health and reduce the price of medicine by 75%. Note: Currently the US has no national health policy.
    * Acknowledge that healthcare is everything you do to care for your health, medicine is what you’re stuck with when your healthcare system fails.
    * Eliminate doctors’ addictions to prescription drugs by ending their monopoly to prescribe them.
    * Shift the financial risk of failed medical procedures from patient to doctor.
    * Acknowledge people die, and allow folks more control over their exit strategy.
    * Recognize opportunity costs involved in medicine and that excessive sums spent to keep one elderly patient alive for a few months is money that could be used to extend the lives of many young people for generations.
    * Acknowledge that medicine does not save lives, it extends and shortens them.
    * Acknowledge that most medical doctors are overpaid clowns who don’t know much about real healthcare. (only kidding about that one).
    * Eliminate direct marketing of pharmaceuticals to TV audiences without full disclosure of the risks, benefits, and NNTs. See NY Times article on NNT.
    * Medicine should be regulated by patients who have been injured by medicine not medical doctors and CEOs who are directly enriched by medicine.
    * Eliminate all tax incentives to buy medicine, particularly the $250 billion deduction given businesses on employee health insurance.
    * Recognize that health insurance is just a collection department for hospitals, doctors, and drug companies.
    * Eliminate medicare because it’s the opposite of what we need, it’s young not old folks whose lives might be extended 70 or 80 years by timely effective medical procedures who have most to gain from a nationally subsidized medicine.
    * What the hell, eliminate all health insurance, go to a cash based medical system.

    Reply
  • ilovescotch December 7, 2017, 12:10 am

    I’m normally a lurker here, but I needed to come out of the woodwork and give a public Thank You to MMM. This post has helped me tremendously. As a moderately high income earner (single income 4 person household) with some bad debt and a family, I was absolutely rocked when I saw my premiums skyrocket to $1,186/mo – I take each child to the doctor perhaps 2 times a year – an out of pocket cost of $800 MAX before insurance discounts. This post was a breath of fresh air – it helped me go from slamming vodka sodas and complaining on Facebook to taking action and resolving the matter like a grown ass man. Thanks MMM. And good luck to all of you who are in the same boat!

    Reply

Leave a Reply

To keep things non-promotional, please use a real name or nickname
(not Blogger @ My Blog Name)

The most useful comments are those written with the goal of learning from or helping out other readers – after reading the whole article and all the earlier comments. Complaints and insults generally won’t make the cut here, but by all means write them on your own blog!

connect

welcome new readers

Take a look around. If you think you are hardcore enough to handle Maximum Mustache, feel free to start at the first article and read your way up to the present using the links at the bottom of each article.

For more casual sampling, have a look at this complete list of all posts since the beginning of time or download the Android app. Go ahead and click on any titles that intrigue you, and I hope to see you around here more often.

Love, Mr. Money Mustache

latest tweets