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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.

 

 

 

 

  • Adam November 5, 2017, 2:57 pm

    The medical tourism route sounds doable for just about everything hit emergencies. Seeing family members get caught with emergency surgery bills of $300k+ put the fear into me there. The Artificial Poverty idea sounds interesting though, but sounds like it could cost more time to do it than you’d save by just paying this off. (Depending on what you’d put your hourly rate at)

    Reply
    • Corey November 5, 2017, 4:56 pm

      Medical tourism seems to be primarily for elective or non-emergent or even non-urgent procedures. And unless you have a pharmacy or a family member abroad that can get you pharmaceuticals illegally from other countries, you’re only really talking about surgical issues, not medical issues that would be cured with often-recurring medications. So we’re really talking about thing like cosmetic surgeries, non-urgent dental procedures, bariatric surgeries, in vitro fertilizations. You can lead a very healthy lifestyle and still get an expensive chronic condition like diabetes, hypertension, HIV, hepatitis C, not to mention unforseeable emergencies.

      It can be beneficial to go abroad for this, but it’s important to remember that even the best surgeons in low risk surgeries get non-zero rates of complications. Those complications are often emergent, even if they don’t occur until you are back from the trip, and then you are stuck in the United States with a very expensive bill, not covered by insurance even if you do have it because it’s a complication of a procedure that the insurance company did not pay for in the first place.

      All that is to say is that I wouldn’t bank on medical tourism as an option. You’re really just self-insuring at that point, and going abroad for a very specific set of circumstance.

      Reply
  • Bryan November 5, 2017, 3:11 pm

    I recently read a study that said the #1 most significant cost factor in US medical care is not cross-state competition (as I thought it was) but actually in monopolistic control. Often, a single entity will own ALL of the hospitals in a region. That means if you want care it doesn’t matter if you shop around… they all have elevated prices because they are charging what the parent tells them to. Cities in this scenario have an average of 50% higher prices for medical procedures. If you can break up the monopolies of hospital owners (not the hospital itself, but the owner of the hospital (i.e. Catholic Health Initiatives)).

    Reply
    • Mr. Money Mustache November 5, 2017, 5:46 pm

      This is an interesting theory – can you provide any links that would allow the rest of us to read about it more?

      Reply
      • KM November 5, 2017, 6:49 pm

        Reply
      • Dave November 5, 2017, 7:04 pm

        Read “An American Sickness” by Dr. Elisabeth Rosenthal.

        Here is her web site: https://www.anamericansickness.com/

        It’s not just hospitals. It’s also doctors, drug manufacturing companies, pharmacy management companies (e.g. Express Scripts), insurance companies, medical device companies, lawyers, and law makers that combine to render the health care system in the US essentially DOA.

        Where else but America would a national health care system have create the need for a “Certified Professional Biller”? Here’s that web site: https://www.aapc.com/certification/cpb/

        The late economist Herb Stein said, “If something cannot go on forever, it will stop.”

        Fearless prediction: The US health care system cannot go on forever.

        Reply
      • Bryan November 5, 2017, 8:41 pm

        Here is the study I mentioned by Avik Roy . Man that took a lot of searching since I couldn’t even remember his name. Page 49/50 has a chart. The prices were 44% higher on average, so I lied’ish when I thought it was 50%.
        https://www.manhattan-institute.org/pdf/mpr_17.pdf
        I am a big fan of foreign medicine… I just purchased treatment for my family for $15 for the entire household of the same pills that would have cost $480 in the USA… and that’s AFTER my very good insurance reduced the price! It’s a total BS system.

        Reply
      • James November 6, 2017, 7:37 am

        Experienced this last month. A single company has apparently took control of all pediatric hospitals in Atlanta over the last few years. So if your child has to be treated for a children’s disease, that is your only option. We rushed to the ER for a rare children’s sickness that had to be treated by one of these hospitals, and not one in our network. This hospital group had dropped the network that our Healthcare Ministry group uses last year. So we are now dealing with high out of network costs being billed directly to us. We are still going through the billing process and there might be a penalty waiver from our Healthcare Ministry group, but the hospital will still receive the elevated prices even if we get the extra high costs covered. I’m thankful the hospitals were there and did a good job taking care of my child, but I do not understand why companies are allowed to buy up all the pediatric hospitals in an area like that.

        Reply
  • firecrackerrev November 5, 2017, 3:25 pm

    Thanks for the mention, Pete!

    Healthcare costs is a hot discussion topic and the biggest obstacle that scares people when then think about early retirement.

    Other American early retirees have mentioned they are relying on sheltering their income and getting ACA subsidies to make healthcare affordable in retirement.

    Do you not want to do that because of ethical reasons? I know you mentioned Mrs.MMM thinks you can afford it on your income and so why not eat the extra cost, and I would feel the same way if I had a large income in retirement. But from a purely logical, pragmatic point of view, “artificial poverty” would be the most efficient solution. Would you go with the ACA subsidies solution if you didn’t have extra income in retirement?

    Reply
    • Mr. Money Mustache November 5, 2017, 5:43 pm

      Yes, I’d gladly accept the reduced premiums that go along with lower income, if we earned a lower income.

      I’d consider this an ethical choice as long as we were still net contributors to the healthcare system (paying premiums but not making claims). On the other hand, if we were constantly generating medical bills I would feel an obligation to pay for them, if I were sitting on a huge surplus of quietly invested money.

      Reply
      • firecrackerrev November 5, 2017, 6:54 pm

        “I’d consider this an ethical choice as long as we were still net contributors to the healthcare system.” That’s a good rule to have. I get asked the question all the time about whether us FIRE people feel guilty about using the healthcare system but not paying into it. In reality, many FIRE people aren’t using the healthcare system at all. With all that time and freedom, we can easily travel to inexpensive places and use medical tourism without taxing the healthcare system. Also, we have more freedom to eat healthier and exercise, so we end up needing to see the doctor less often. Back when I was working, I used to get sick all the time and have to see a physiotherapist every other week for my wrist and back problems. Now, I never do.

        Reply
      • Jeff November 6, 2017, 10:58 pm

        Since I am an early retiree like MMM, I currently choose an inferior tier compared to what I could qualify for (though not the lowest) to account for the ethics issue. Since I do not need health care, I’m actually overpaying substantially, but if I get hit by a bus one day, I want to have been fair.

        Reply
    • Mr. Freaky Frugal November 5, 2017, 7:43 pm

      I’ve been FIREd since 2012 and I’ve been doing the “artificial poverty” approach since Obamacare started. So every year, I select a HDHP and use a Roth Conversion to control my taxable income. And every year, my subsidy is GREATER than my premium, so I get a tax credit. All perfectly legal.

      For 2018, the additional money I make from the subsidy after paying for the premium jumped to an insane amount – over $7,000. This is because my state told insurance companies to load the Silver Plans up with higher premiums because the Trumpster was threatening to cut off the co-pay subsidies for Silver Plans which he did do. But the Silver Plans are used to determine the size of the premium subsidy so it jumped big time. And then I bought a low-cost Bronze Plan. Net result – I made a boatload of money.

      I plan to write my own blog post about this craziness.

      Reply
      • Mr.Penny May 10, 2018, 1:38 pm

        Did you ever write a blog post about your experience?

        Reply
  • Grover November 5, 2017, 3:26 pm

    So I’m 57 (retired for many years) and our premiums would be over $2000 per month. We were subsidized by the taxpayer to the tune of $1750 per month since I keep my income low. We just got informed our insurance will double too, and even with subsidy, will be an over $650 payment per month now. Thing is, the HCA makes sense for us…still. My wife has a chronic condition. The $11,800 max out of pocket still works out for us, and is a “deal” compared to what the medical costs would be without insurance. The reason rates are going up is people like us. The healthy are subsidizing the sick, and paying the price. Isn’t that what good socialized medicine is supposed to do? If people that are healthy drop off, and they are, the insurance companies will go bankrupt paying the medical costs for the sick, which are virtually infinite.
    Part of the problem is healthcare costs. Part of the problem is the crony setup in HCA to begin with. Who knows what the real solution may be.

    Reply
  • Sean Merron November 5, 2017, 3:30 pm

    If you had the “Share this article” links with the social media icons, I would every time. Or am I missing them?

    Reply
  • Alex November 5, 2017, 3:36 pm

    I think the Mustachian lifestyle and philosophy could be considered a religion. When people ask your religion just answer back “I am a Mustachian. Or I practice Mustachianism”. This way we could now obtain religious status and have group insurance similar to the Liberty Ministry. Our values might be a bit different but hey, religions can be different for each other and we believe our philosophy truly helps people and society. Call it the Mustachian Ministry!

    Reply
    • Mr. Money Mustache November 5, 2017, 5:39 pm

      Yes – it sounds good, and I looked it up just for fun when writing this post – but the exemption only applies to religions which were established before 1950.

      Reply
      • linus silvers November 9, 2017, 7:56 pm

        Now according to Joe Rogan, the difference between a cult and a religion is if the leader is still alive. I don’t want to see anything bad happen to MMM. But, there has got to be a religion that we are a subset of. Or, we are technically a subset of (wink, wink). Or one we can just take over, like the Shakers? They like woodworking, and there’s not many left do to their beliefs. Just saying.

        Reply
      • Glenn February 19, 2019, 10:00 pm

        It’s simple Jesus had a mustache, right? So, naturally, Mustachianism is a denomination of Christianity.

        Millions of Christians had mustaches before 1950. That’s an “established” fact.

        If anybody needs more proof I’m certain there a Book:verse in the Bible. And, it had to be the Mustachians that invented the super thin paper that Bibles are printed on.

        Reply
    • Johan November 5, 2017, 8:53 pm

      Haha. This reminds of this episode of Last Week Tonight: https://www.youtube.com/watch?v=7y1xJAVZxXg
      Apparently it’s incredibly easy to qualify as a religious institute the way the law is written.

      Reply
  • Green thing November 5, 2017, 3:36 pm

    My company of 1200 employees is self-insured, and our premiums are actually going down this year. We bank the premiums, Blue Shield administers the plan (NOT insures, they just do the paperwork and send out the payments to doctors). We have a health incentive that halves your premium if you consent to an annual (confidential) health screening. Between $75/mo premiums and the deductibles, the max out of pocket I could conceivably pay is $3600. And if I have no claims, that just hangs out in my HSA retirement account. On the minus side our rates went up a bit the one year after we had two guys die after prolonged cancer treatment. It was fairly obvious it was because of them, which was sad and kind of uncomfortable.
    I don’t know how this is set up, I suppose it’s some kind of cooperative. If I weren’t working there I’d look into how to set this up. Pretty sure I could find 1200 people willing to pay these rates. Our company covers about half the premium, and kicks some into the HSA. Without that it seems like it would be about $150/ mo plus $3K max out of pocket. Not bad.
    We’re also self-insured for liability and other stuff, 100% ESOP, and have a very stable cash reserve. Which I think is pretty cool. While I don’t want to work forever, I might as well be at a company whose ethics I can accept.
    Haha! Now that I’ve bragged so much on my employer, I should just end this with, “and we’re hiring architects and engineers all over the world.”!

    Reply
    • Mr. Money Mustache November 5, 2017, 5:33 pm

      I have heard about the idea of a self-insuring company before, and I like it.

      How about this invention: a platform for groups of people to self-organize into similar pools, which can then self-insure. It would gather the people via a friendly social media app, and collect any required financial backing against extreme risk by issuing financial instruments which pay interest. The legal and organizational stuff would be all automatic, built into the platform. We Mustachians would obviously be among the first groups to organize.

      nsurnz – Find your Tribe.

      Could something like this? Does it already? If not, should it? Let’s get on it, silicon valley!

      Reply
      • Colin November 5, 2017, 6:21 pm

        Hey MMM,

        Here’s something you may not have heard about. We’ve started a new kind of medical practice called Dirext Primary Care. It’s where doctors ditch the fascist US medical system and deal directly with patients, no third party payers, no copays, no deductibles. Would you believe you could get unlimited basic medical care for less than the average family cellphone bill? I’m talking about no waiting, text & email enabled, 24/7 access to a doctor who can spend as much time as you need. About 5% of family docs in the US have swtiched, and more do every day. We don’t need single payer. We need to get the bureaucracy out if medicine and let competition between doctors save our medical system. Here’s a map that has many of them listed. http://www.dpcfrontier.com/mapper/

        Now you might say wow! 80% of healthcare spending in the US is primary care, and could be cut from $19,200/family to something like $2,000-4,000?! Yes, it’s true. Think about how many bean counters are employed when you hire insurance to manage primary care. The sales people, regulators, billers, coders, software writers, lawyers, managers, etc etc. The typical doc spends 20 hours a week doing paperwork! Guess who pays for all those salaries? You do, and the typical doc has to bring in over 2 million a year before they even earn a cent.

        Our parties in congress mostly want to fight over who pays for healthcare, the rich or the middle class. The best answer of course, is a free market where prices drop and quality rises. Doctors are already starting to break free and make it happen.

        Reply
        • Mr. Money Mustache November 6, 2017, 11:38 am

          Thanks Colin, I’m aware of the DCP idea and I really like it. But does becoming a subscriber allow me to get out of the individual mandate and tax penalty? If so, I’m on it this afternoon.

          Reply
      • Dan November 5, 2017, 7:17 pm

        This was the same concept I was thinking about when I stumbled upon health share ministries. You still have the problem of healthy people organizing (perhaps excluding those with significant pre-existing conditions) – where do the unhealthy go? So while it may solve a problem for healthy individuals there remains a risk pool that still must pay an even higher premium. It seems, given the high cost of the medical procedures themselves (a root cause) we’d need to have a substantial subsidy from the government for all of the “non-healthy” that would not be desirable to include when self-organizing (assuming the goal was to significantly lower premiums).

        Reply
      • Green thing November 6, 2017, 12:06 am

        A quick Google suggests that smaller companies are doing exactly this. They are pooling with other small companies of similar risk profile (e.g.white collar workers are not matched with coal miners) and using the same self-insured process. They add a “stop-loss” reinsurance so that the whole thing won’t collapse if there are a few folks whose costs become extreme.

        It sounds like the administrative costs for this can get very high and the administrators do their best to skim off some profits from drug sales and other pass-throughs. So they still get their pound of flesh in the end. Maybe if that pool got their own administrator. Wait, would that be a health insurance company?

        Separating entirely by current health status doesn’t seem quite fair to me. Discounts for continued good behavior, I find more appealing.

        Anyways it sounds like you’d need 50-100 willing souls for this method. Seems worth a shot. Like many, health insurance is one of my biggest future worries/ uncertainties. I’d definitely sign up for the pool in a few years when I get FIREd.

        Reply
        • Green thing November 6, 2017, 12:16 am

          I should add that my company subscribes to a cost researching service that gives that patient a kickback when you choose wisely. For instance, I needed some lab work but it wasn’t super urgent. Doc wanted to send me to the in-house lab. I demurred and got a paper prescription instead. I called the comparison service, got the same labs for $800 less elsewhere, and they sent me an $80 kickback. Pretty good incentive!

          Reply
  • aperture November 5, 2017, 3:44 pm

    W weI think the ACA is now in a death spiral. Fewer people will seek insurance, leaving the pool of people that are insured sicker and more expensive. This will force premiums up, forcing more healthy people to leave. Mr.MM’s insurance company is a nonprofit and does not actually make money through ACA policies (profit in NFP world is covering costs and having enough left to invest in infrastructure). I would love to see some of the ideas MMM promotes implemented. There is so much waste in how we do healthcare in America, it would be easy to reduce costs.

    Reply
  • James B. Shearer November 5, 2017, 4:06 pm

    “… 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.”

    Is this really true? I thought preventive care like vaccines and an annual physical was not subject to the deductible.

    And as another commented above if you have insurance you get the insurance rate which is often much cheaper than list. You claimed above to be able to personally negotiate a rate better than the insurance rate. Perhaps you can but the average person can’t. Every so often I read a horror story about some poor person without insurance really getting gouged. I had minor surgery a few years ago and the insurance company negotiated a 97% discount off the surgeon’s list price. I really doubt my ability to get a remotely similar discount.

    Reply
    • Jim November 5, 2017, 4:27 pm

      Knowing what you now know about your surgeon, would you ever want to use him/her again? As you stated, the surgeon seems to have been willing to charge a rate that was 33 times (the inverse of accepting a 97% discount) what in the end they were willing to do the work for. How can that even remotely legal or ethical?

      Would you have gone in if he/she had published this on the front door as you walked in:
      Charge for James’s surgery if we bill his insurance : $500 (random guess)
      Charge for James’s surgery if we bill him personally: $16,500 (same as $500 above before a 97% discount)

      Healthcare is just jacked up in this country….

      Reply
      • JPMD November 5, 2017, 6:01 pm

        It’s not as simple as the surgeon “jacking up” the price for the surgery–much of that will go to overhead…nurse’s salaries, receptionist’s salaries, probably a PA’s salary, keeping the lights on in the office, paying exorbitant malpractice insurance, paying off student loans, saving for retirement, etc, just like the rest of us, not to mention cost of living. With surgeries, there is also typically a surgical fee and a facility fee, so you get billed by two entities. The facility fee covers the space used to perform the surgery (inpatient, surgicenter, etc), the nurses, the medications, etc. Facilities tend to overinflate what they charge insurance companies in order to cover all the free care they give away to the indigent. In fact, studies show that hospitals that serve more underinsured patients bill higher in general, because they are trying to recoup their costs. Uninsured patients using the ER as a walk in clinic contribute to this. Of course, insanely overpaid hospital executives contribute to this as well! Don’t blame us docs!

        Reply
        • Jim November 5, 2017, 6:20 pm

          I understand all that but the post I was replying to stated that the surgeon accepted a payment that was 3% of what he/she wanted and billed and presumably would bill to a walk-in without insurance. Presumably the surgeon was pleased enough with the result of his bill (recouping only 3% of it) to remain in business and still do business with patients that had the same insurance carrier as the original poster. The surgeon’s expenses aren’t any less just because he accepts a lower payment from the insurance company, right?

          Reply
          • MKE November 9, 2017, 11:22 am

            Jim, you sound right to me, but obfuscation is one of the key components of keeping medical costs high, so what you got was a reply that was deliberately confusing. If you don’t know what’s going on, you are more likely to give up and hand over your cash.

            Reply
      • James B. Shearer November 6, 2017, 12:51 am

        “Knowing what you now know about your surgeon, would you ever want to use him/her again? …”

        I was startled by the amount of the discount but I didn’t really hold it against the surgeon (who ended up getting less than some of the other people involved). This is the most extreme example in my personal experience but the insurance price is often much less than the list price and I think Mr Money Mustache is underestimating the problems you can run into as a cash patient. In some respects it is a status thing. Just as some people make negative assumptions about people without credit cards they can make negative assumptions about people without health insurance and this can cause you trouble.

        Reply
  • CapitalistRoader November 5, 2017, 4:08 pm

    Some years back I went shopping around for a shoulder MRI. In the States it was never less than $2K. Since I traveled to Asia quite a bit at the time I priced India, Thailand, and Taiwan, and additionally Panama. Turns out Taiwan won on both cost and quality. I ended up having the MRI at a hospital in Taoyuan, which is the city Taipei’s international airport is in. Accredited by the Joint Commission International and affiliated with John Hopkins.

    $300. Superb docs. Figure <$1000 for an RT flight and it paid for a vacation. Taiwan has the obligatory government monopoly health insurance for its citizens so hospitals and docs are severely squeezed for money. They can make fatter margins with medical tourism. It really is win-win. I need some stuff lasered off me and Kaiser wants some ridiculous amount of money per mole, so I'm planning another trip back to Taiwan. Taipei is an Asian hub so lots of cheap flights to where ever you want to go from there.

    Reply
  • Stop Ironing Shirts November 5, 2017, 4:08 pm

    Your second bullet point is spot on! There should be a one procedure, one price rule. I’m about to retire and we have the risk of a rare injury that could recur because we exercise, so we HAVE to have a plan that covers a certain hospital (two in the country). We can’t just cash pay that hospital because the cash-pay or uninsured price is 2-4x what Anthem/Blue Cross’s contract rate is. That’s just absurd! We see a $15,000 gross bill then Anthem pays out $1800, which is legitimately what the procedure should cost. It may even effect the state we have to retire to, since Kaiser is notorious for fighting care outside of Kaiser’s network.

    Interesting times for sure. Can we just go to Costa Rica healthcare immediately? Baseline care from the government then private insurance/private hospitals when you want it faster?

    Reply
  • percy k November 5, 2017, 4:12 pm

    I’m comfortable with dying when it’s time. If it’s massive tumor and six months to live time I’m comfortable with suicide. I am currently abroad and had to but a travelers health insurance. One visit to a GP here in the Netherlands reaffirms my decades long commitment to having no health insurance, ever, at all. Large bills? Who cares. A good credit rating is just a way to qualify for more debt. I have no mortgage, no kids, no car. I have student loan debt. Again, who cares. If I get a job I’ll pay .10 of my income. I’m 51. I’m giving myself ten more years on this succulent piece of grass then I’m heading out.
    That is my health insurance.
    Ride a bike :-)

    Reply
  • Adam November 5, 2017, 4:12 pm

    To offer a Student Doctor’s perspective on your suggestions:

    “Eliminate the 75% of healthcare spending we currently waste on self-imposed lifestyle diseases”
    Hell yes! We spend inordinate amount of time and money (even if not 75% a large fraction) on entirely preventable diseases. The challenge is that it’s both very simple and very difficult to fix lifestyle.

    “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.”
    Difficult to implement, and with uncertain results, but again I heartily agree.

    “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.”
    I think you underestimate how difficult medicine is. There is a reason that selection, training, and certification are so rigorous. Also, labor costs are not a large part of the problem (paying doctors absolutely nothing would drop costs by maybe 10%).

    “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.”
    I’m not clear on this point. What do you think nurses should be doing independently?

    “Start using search engines and artificial intelligence for diagnosis, rather than flawed and expensive humans.”
    Diagnosis is really, really hard because patient’s do not read the book (i.e. they do not present classically nor clearly). Also, who do you think is going to be deciding what exams/data to collect, perform/obtain them, and feed the AI? Also, many symptoms can be caused by many things, including nothing. Do you want a computer trying to decide if your inability to move your leg when you woke up this morning is a stroke or that you’re faking it (or that you’re “faking” it BUT DON’T KNOW THAT)? (Answer: None of the above. You have a tick on your foot)

    “Eliminate the right for anybody to sue for medical malpractice”
    Even though I’m one of the people who would be sued, I strongly disagree. The law as written actually means you have to mess up (i.e. malpractice) to be found liable and it’s an important insurance of quality. The problem is that if there’s a suit, even one that stands no chance, you’re out at least 2 weeks of labor and $20,000 to get it dismissed. Fixing this is rather complex.

    Reply
    • snowcanyon November 6, 2017, 12:19 pm

      I love MMM, but one thing I have noticed about engineers is that they just don’t get medicine. It’s so non-Cartesian.

      – I can’t think of many diseases that can be proven, in an individual case, to be entirely lifestyle-based. One example might be a bad bicycle accident or other kinds of trauma- would MMM suggest that we not cover bike accidents? How about knee replacements that are necessary due to overuse in high-level athletes. Should we encourage people to be more sedentary? How about STDs? No sex, probably none of them, but I wouldn’t want people dying young because of AIDS simply because they forgot to use a condom once.

      -The best way to reduce health costs isn’t prevention, it’s allowing people to die earlier. One of our esteemed tobacco companies marketed cigarettes overseas by selling the idea that smokers would have lower lifetime healthcare costs as they die sooner.

      -I agree in theory on standard pricing, but what happens when a standard procedure turns out to have a complication? A person thinks they need a knee scope, but end up needing a knee replacement, or turn out to have an expensive-to-treat joint infection. Do we say go home, lose your knee to infection until you can pay? A woman is ready to pay for a vaginal birth, but needs an emergency C-section and gets a blood clot or an infection, necessitating a long and expensive hospital stay. Do we give her a daily tally of her charges while she’s intubated in the ICU? One reason they can do pricing transparency in other countries is that they can kick you out of the hospital without any regard for the severity of your disease. We can’t do this in the US, so while it’s easy to quote a price for, say, an MRI (and we should absolutely do this) you really can’t quote a price for an ICU admission for pneumonia. It. Is. Not. Like. Fixing. A. Car.

      -Telemedicine has not been shown to decrease costs- in fact it increases it because patients tend to use telemedicine and then go and see their PMD for confirmation. Without advanced, in-home diagnostics, I fail to see how most diseases can be managed by telemedicine.

      -We do certify physicians from other countries- they have to do a residency here, and with good reason as standards vary and clinical practice is vastly different. Also, it seems really cruel to take clinicians away from countries that really need them and that have a much more severe doctor and nurse shortage than we do.

      -If you cut residency to 40 hours a week, a la Australia and the UK, it would take twice as long. I’m not sure if this would improve the situation- some would prefer it, others want to get out and practice. I do agree that some could be shortened by fast-tracking people to certain specialties, but good luck selling that to a system that depends on resident labor. As to the medical school curriculum, it is being modernized and has much less memorization.

      -Nurses are already practicing independently. They do fine, but they also burnout just like physicians. I don’t see how a nurse can, say, perform a knee replacement, without equivalent training to a physician, at which point s/he would require a similar salary . Also, there is a huge nursing shortage, so this will create an even bigger manpower shortage. So it doesn’t solve much.

      -My EMR gives me a sepsis alert, incorrectly, for every trauma patient, and you want it do diagnose? We’ll get there, eventually, when neural networks are good enough, but AI can’t even diagnose breast lesions or melanomas correctly, and that’s mostly pattern recognition. Also, what makes you think AI will be cheaper?

      – There needs to be tort reform, but there also needs to be compensation for those who are injured by the medical system. Agreed with the above points about QI- if you look at systems where it’s hard to sue (the VA, for example, and Kaiser), quality is much lower.

      -Single payer would definitely reduce administrative costs, and I hope it happens. That having been said, every Western nation is facing a huge increase in health costs secondary to aging populations and advanced technology and life-extending treatments.

      No one’s job is unskilled, particularly not those that require years of training. You are obviously interested in improving the system, so I would suggest you learn more about both clinical medicine, medical economics, epidemiology, and also read up on the successes and failures of AI in clinical medicine.

      Reply
      • Stephen November 6, 2017, 12:36 pm

        -Nurses are already practicing independently. They do fine, but they also burnout just like physicians. I don’t see how a nurse can, say, perform a knee replacement, without equivalent training to a physician, at which point s/he would require a similar salary . Also, there is a huge nursing shortage, so this will create an even bigger manpower shortage. So it doesn’t solve much.

        This isn’t about a nurse doing a knee replacement, and even though we do have a big nursing shortage this doesn’t apply there, either. The shortage is largely with bedside nurses, though admittedly it typically takes someone starting as a bedside nurse to become an NP.

        That said, the issue is we have a few hundred thousand NPs out there *right now* that aren’t allowed to practice independently. Maybe they can in your state, but in many (TX, MS, AL, LA, FL, GA, NC, SC TN, VA, DE, MA NJ, NY, PA, IL, OH MI, MO, KS, SD and CA) they can’t. If anything, it’s a bigger issue *because* we have a nursing shortage. We need to make the best use of the nurses we have.

        Reply
    • Stephen November 6, 2017, 12:28 pm

      Hi! I think I can help answer this part:

      “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.”

      What MMM is talking about is Scope of Practice, and mainly the inability for nurses in some states to practice to the levels that they were trained to do. The Institute of Medicine (now the National Academy of Medicine I think) came out with a report around the time of the ACA to talk about where nursing regulations and nurses as a profession needed to go in order to meet the need of the general public.

      Simply put, Nurse Practitioners are trained well enough to act as primary care providers without any drop in quality at a much lower cost. What that means is that sure, you want your doctor to do your rotator cuff surgery, but does it hurt to have a NP check for strep throat or do your annual physical? No, it doesn’t, and many people see a “doctor” and have no idea the person is an NP.

      In MMM’s example, some states say nurses can’t run their own primary care clinic without a doctor signing off. Even if they don’t do any of the work, they put their name on it to meet regulations. This adds a huge monthly cost to the clinic for no added quality.

      What he might not realize is some states don’t even let nurses do that: https://www.bartonassociates.com/locum-tenens-resources/nurse-practitioner-scope-of-practice-laws/

      Some states (mostly in the midwest and southwest) allow NPs “full scope of practice.” This means they can do exactly what MMM wants them to be able to do. Some states, such as California, allow nurses to give primary care but not without having a doctor sign off. Others (read: Southeast) don’t allow much of anything. In Alabama, for example, despite years of education and proven results in studies, nurse practitioners can’t even sign a worker’s comp claim or a handicap permit, as ridiculous as it is. Imagine having to take up a doc’s time for something as trivial as that. The problem is much farther reaching than MMM might even realize.

      My job revolves around this industry, though I don’t lobby and I’m not a nurse. I just see these statistics day in and day out so I have the knowledge to answer your question. The ability of politics and lobbying to get in the way of quicker and cheaper high quality care for patients is really sad.

      Reply
      • Call 911 November 7, 2017, 6:05 pm

        The idea that primary care NPs cost less is very much still up for debate. There is no billing code for NPs to receive less money for the “same” care an IM or FP residency trained physician would providen but their referral rate to specialists is higher, and statistically significant. In other words, they’re more likely to see two “providers” for the same result.

        Another issue, what does the nursing scope of practice entail? Where must they stop? Several years ago, a state medical board brought a legal challenge to NPs “practicing medicine” without a license. The nursing board responded saying that nursing practice is whatever the nursing board says it is. The courts sided with the nurses. Thus, if the nurses decide brain surgery is nursing practice, it is.

        Reply
  • Micheal Cody November 5, 2017, 4:13 pm

    There is also the option of just checking the box on your return that says you have health insurance. The IRS has been instructed not to enforce the individual mandate nor does it have the manpower to do so.

    Reply
    • Mr. Money Mustache November 5, 2017, 5:23 pm

      Does anybody have more information on this?

      I recall my insurance company asking for my Social Security number on a form, stating that they were using it to report to the IRS that I had purchased coverage. This would make much more sense as a verification method, than just depending on me checking a box.

      Reply
    • The Wealthy Accountant November 6, 2017, 11:37 am

      THE IRS verifies this info. You’ll get a letter if you answer incorrectly. Revenue can’t garnish or lien the healthcare portion of a balance due, but can grab future refunds.

      Reply
  • William November 5, 2017, 4:22 pm

    This is tough. I’m in the same boat. Age 59 my prem. is doubling. The compound rate for premium increases since 2010 is 23%. Deductibles are ridiculous. Since we who seem to have this problem appear to be in a cohort that is retired early and have decent income and assets I have found that complaining about this kind of thing can get some violent reactions from people. I’m ducking my head on that for now except for here. I’ve considered all the options you described except some of the outliers. I’ve decided to pay for insurance vs take a penalty and have roughly estimated my exposure between now and 65 at that 23% or greater growth rate (though who knows? maybe a constant 50% now?). That is the price to not be bankrupted I guess. As a red-blooded capitalist I hate to say it but on the path we are on single payer might be an alternative. Right now there is no limiting principle on premiums — as you say: where does it stop 1000/mo, 2000, 1M? If it were embedded in income taxation there is at least a limit, right? There are better ways to solve this I suppose but right now the trajectory sucks.

    Reply
  • Ben November 5, 2017, 4:30 pm

    Is a Health Savings Account no longer an option?

    Reply
    • Ryan November 5, 2017, 5:11 pm

      HSA”s are still around but you cannot pay monthly premiums from your HSA only deductibles.

      Reply
      • Jim November 5, 2017, 5:48 pm

        That “may” change, however the max a family can put into an HSA is $6750 per year, so it would cover around half of the premiums of MMM. In other words, it might help a bit, but is no solution. Five years ago it made sense. Not anymore…

        Reply
  • Miles November 5, 2017, 4:45 pm

    A couple points:

    1. I think you’re putting way too much faith in the US congress. There’s no way a government-controlled health insurance system would work in a country that banned the existing medicare from negotiating drug prices on behalf of their clients.

    2. AI efforts for diagnosis are largely ineffective. Part of it is the cost of developing anything for the healthcare field & the already high cost of AI even before that. Another part is the fact that most if not all large hospitals can not share the necessary data that could be used to design an AI in the first place because of legal concerns (due to such things as HIPAA and more restrictive privacy clauses they may have agreed to with various insurance providers)

    Reply
    • JPMD November 5, 2017, 8:46 pm

      Sister-in-law’s idiot ex-boyfriend, who sold EMRs (electronic medical records) to large hospital systems once boasted to me (a physician) that ‘someday all docs will be replaced by kiosks!’ I had to explain to him that there is a lot of subtlety in diagnosing patients that takes years to master but, more importantly, studies show that what patients want, more than anything, is to be heard by their physicians. They want time to tell their stories and the care and compassion of a real human being, not a computer. Computers will never replace doctors, who do a lot more than just ‘diagnose.’ Likewise, the crappy NPs I have had imposed on me by the system I work in, some of whom can barely write a concise, organized medical note after just graduating and becoming licensed, will never replace my years of study and training and experience. I know to the general public we make it look so easy, but there is a reason we make it look so easy. Everything else that comes between the doctor-patient relationship–the hospital and insurance executives, the nurse managers, the midlevel providers, the computers, the insurance companies, etc–is just driving up costs and interfering with what truly matters. AI is the same–someone else trying to make money off of the work the actual physicians do.

      Reply
      • snowcanyon November 6, 2017, 12:56 pm

        Yes. Yes. Yes.

        Reply
      • Stephen November 6, 2017, 1:17 pm

        ” Likewise, the crappy NPs I have had imposed on me by the system I work in, some of whom can barely write a concise, organized medical note after just graduating and becoming licensed, will never replace my years of study and training and experience.”

        Do you have an issue with having NP’s provide primary care? That’s what MMM is talking about. Are your ‘years and years of study and training and experience’ really needed to diagnose strep throat? Studies say no, even if confirmation bias says yes.

        http://www.healthaffairs.org/do/10.1377/hpb20121025.457840/full/

        Reply
        • Corey November 11, 2017, 9:10 pm

          Primary care is one of the more difficult types of medicine to practice. Due to the pressures of most practices, you have to cover an enormous amount of ground in a tiny amount of time. Most patients are stable, some are even healthy, and so what separates the best PCPs from the rest is picking up and piecing together little things that can help them make a diagnosis months or years before someone else, as well as being extremely thorough. It can be like finding a needle in a haystack. Due to the overwhelming amount of stable and healthy patients, this might not be measurable in a study without an enormous amount of patients enrolled, but for your own health care I guarantee that you would want someone with as much training as possible taking care of you or your loved ones.

          Reply
          • Corey November 11, 2017, 9:17 pm

            Also, diagnosing strep throat IS easy, but it’s not really primary care. It’s more of acute care, but of course it can be done in a primary care office if they can fit you in, or in an urgent care clinic. But the vast majority of primary care is balancing many medications, weighing the advice of various specialists then making your own decisions based on their recommendations with a more comprehensive understanding of all of the patient’s illnesses, ensuring that patients have all of their age-appropriate screenings and vaccinations, making new diagnoses and initiating new plans, and trying to find anything that may cause problems in the future such as occult cancers, all within 10-15 minutes, including time to write notes.

            Reply
  • Ryan November 5, 2017, 5:10 pm

    Living in Ohio my family of 5 has one choice for insurance. We have the Bronze plan with the highest deductible possible and our rate for 2017 was $1270 and for 2018 is going to $1600!!!!! I think the only realistic work around on this is starting a business and running health insurance through it as MMM is doing.

    Reply
  • The Vigilante November 5, 2017, 5:11 pm

    “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.”

    A necessary prerequisite to this would be to allow the insurance companies to compete at all! There’s a terrible amount of red tape preventing that…and I suspect that’s the single largest barrier to cheaper health insurance. (Although there are several others, which you mostly hit.)

    Reply
  • J Leigh November 5, 2017, 5:23 pm

    Another suggestion may be to find a part time job with great benefits. I know they are few and far between but my significant other and I do just this. He works 20-25 hours a week 10 months out of the year in exchange for really awesome medical benefits. I know this blog is about early retirement but this may be another option for some people to think about…

    Reply
  • Dan November 5, 2017, 5:25 pm

    Folks: It’s time for this reminder. I’ll just give the cost per capita of a few countries. Maybe, you ought to think about this the next time you bump into one of our elected politicians. Other countries seem to have better systems. I guess we pay more because we are smarter than all of these other countries. These are 2015 numbers. Based on increases, I’ll betcha it’s worse now. No tricks values are in US dollars. It’s in Wikipedia.

    US -$9403
    Canada – $4641
    Australia – $4357
    Germany – $5182
    Finland – $3701
    Iceland – $3882
    England – $3377
    Japan – $3727
    Norway – $6347

    Mr Trump said he was was going to give us a terrific system. (Terrific for who?) I kinda like some of what he does so I’m not going to be hard on him, but the Congress people have had time to give us a better system. They just need a lot of pressure from us. I’d like to see some sort of system that gives preventive care. I think if diet and exercise were encouraged, we’d have lower health costs and the business folks would see higher productivity.

    Mine went up too. It’s fixable, we just have to make them do it. This should be a key issue. It affects each of us.

    Reply
  • JessicaD November 5, 2017, 5:29 pm

    If you or one of your kids were to be hit with a “simple” chronic illness like type 1 diabetes or IBD, something that has no true cure and something that you couldn’t skate out of the U.S. for quick treatment of, without traditional insurance coverage your savings would be depleted faster than the blink of an eye. The expense of specialists, medical devices, and lifelong medications is exorbitant. Without insurance coverage, and even with your well-padded nest egg, I would guess that the pain of those expenses would be felt quickly. Thank you for sticking with the ACA – not only from those of us who support the ACA, but for not risking the wellbeing of your family’s health and financial health. Jessica

    Reply
    • Marcia November 6, 2017, 10:46 am

      This is a good point. When I think of the cost of health insurance, and it being a good “bet” or for people who are “bad at math”, these are the points that I think about.

      1. We low relatively low users of health care. We exercise and eat right. But:
      – Childbirth #1 $8400
      – Childbirth #2 $14k
      – Child #2 born with a birth defect, cost $25k to repair.

      2. Even being healthy, we are not immune to heart problems, cancer, or accidents. Even the healthiest people I know have gotten cancer at young ages (including children), have been out of work for years after being run over by a car while they were biking, or had a debilitating stroke (at 49!). Any one of those will deplete your entire nest egg.

      3. I consider paying more for health insurance when I’m young-ish and don’t use it to be
      – a way to make sure that sick or older people aren’t broke or homeless because of their insurance payments – or worse, don’t die because they cannot afford healthcare (which happened to my college roommate’s brother)
      – a hedge against my own future. We are pushing 50, and it’s not unlikely that we can end up using more healthcare in the next 15-20 years.

      I understand optimization at all, but in some cases, I think it can go a little far. I can completely understand the desire to say Eff You to the big insurance companies who are making bank and cheating people. What’s hard, for me, is when opting out screws over older or sicker people.

      Reply
  • Tara November 5, 2017, 5:40 pm

    When I retired early at 49, the first thing I did was move back to Canada. I knew my early retirement plan wouldn’t be doable otherwise. I have a travel insurance policy through Medipac that costs about $500 for five months of coverage while I spend the winter in the US. I am deeply grateful for this option. My taxes are a bit higher but it is worth it for the peace of mind. When I turn 65 I may consider moving back to the US but who knows what will happen in the next 14 years.

    Reply
  • Brian in Brooklyn November 5, 2017, 5:55 pm

    Shop around! Ask Questions !!

    I recently saved myself $2500 in medical costs by going directly to a physical therapist, out of pocket, instead of using my HDHP + HSA to go to a doctor -> MRI -> pain meds -> physical therapist. End result was the same. The PT I called told me, “come see me, we will not do anything that can hurt you. I will be able to tell you if your condition is serious enough to warrant a doctor and MRI.” Plus she offered me a reduced cash price when I told her I had a HDHP and was trying to save money. This is after I explained that I could not walk, sit, bend over, and was in extreme pain. I went home with a stretching routine and some Aleve. Two weeks later I was back in the gym feeling better than ever, and my $2500 was used for an extra payment on my student loan.

    In a similar event I recently visited the eye doctor. She prescribed me two eye drops which totaled $550! I couldn’t believe it. I asked the pharmacist to contact the doctor to find an alternative. After two more visits to the pharmacy and two calls to my eye doc, I ended up with two eye drops which totaled $27. I used them for a total of 3 days and my eyes feel great. One of the eye drops, the $350 one, actually had an earlier version that was now offered over the counter for only $12!

    The crazy thing is that no one asks these questions, and when you do, the doctors and pharmacists act like you are a crazy person, “yes I want an itemized cost of everything you will do before you do it so i can compare your costs against your competitors, no my health insurance will not cover this.” Most people have a $20 copay and don’t care if the cost is $20 or $2000 because they pay the same amount. Even my doctor had no idea how much the prescription she gave me cost until I told her.

    Shop around, ask questions – keep those dollars working for you!

    Reply
    • Jim November 5, 2017, 6:32 pm

      The example of the eye drop cost is something that I would expect any competent eye doctor and pharmacist to know about and suggest to a client. Since the earlier version is now over the counter it’s unlikely to be some obscure formulation. My view is that I am their customer, however it appears that they are doing the bidding of the pharmaceutical company. My ex-neighbor on one side is a Pharma rep, the ex-neighbor on the other side is a doctor, she was constantly trying to get him to prescribe HER company’s products.

      People need to wake up. Maybe I have a tinfoil hat but I don’t think so. All of the people that have commented so far about their premiums increasing substantially and having a very high deductible VERY likely pay for their medications out of pocket and do not have a low copay for them. Find a new eye doctor and explain to the original one why you were disappointed enough to leave. Same with the pharmacist. It is the ONLY way they will learn to actually help their patient and not just profit off them. Lest anyone misunderstand, profit is fine, gouging or taking advantage is not.

      Reply
    • Dave November 5, 2017, 7:56 pm

      100% correct here. The more questions we ask the sooner this crap will be more transparent for all of us. 5 stitches in the emergency room can run you $5,000. Same 5 stitches at your PCP can be $300. I just had that one happen to me a few months back. Highway robbery.

      Reply
  • Deb B November 5, 2017, 6:00 pm

    MMM :)
    My healthcare policy from the market increased exactly as yours and I’ve been in a state of worry until reading your article. Yes that increase takes a bite from my savings plan, but hopefully by next year there are more affordable options, or I consider some of the alternatives you described. I feel blessed to be able to save and will continue to live within means.

    Reply
  • Scott November 5, 2017, 6:19 pm

    Over a year ago we retired early and decided to travel full-time. Getting access to healthcare in multiple states is a major pain in the ass due to networks and limitations of these overly complicated plans. I found Liberty Healthshare and decided it would be a good option. My wife had a lot of concerns about it but called them to discuss her concerns. Bottom line if you agree to take care of yourself and know that certain things won’t be covered that violate their beliefs, it’s pretty great coverage. Even better in some respects than when we had an employer paid high-deductible plan.

    Reply
    • Glenn February 19, 2019, 11:12 pm

      Scott,
      Did you enroll with Liberty? I checked out their site and kept seeing “This is not insurance” & may not cover your bills. How has your experience with them been? I just can’t see how their model works without any legal obligation on their part, and no regulatory oversite.

      Reply
  • Mike November 5, 2017, 6:21 pm

    Hi MMM,

    Good post and definitely highlights that premium increases from the ACA are especially tough for those with medium to high incomes ($50k to 100k or above), you have too high of an income to qualify for the subsidy but the increases still make a huge difference in the percent of your income going toward healthcare cost.

    One option I didn’t see in the post was using the hardship exemption you mentioned in order to purchase a Catastrophic plan. It seems like a happy medium between going self-insured and staying in the market as is… It’s my understanding that the qualifications are the same as being exempt from the IRS penalty (obviously you’d need to check to ensure your state interprets the rules the same as mine).

    The Catastrophic plans have an even higher deductible than Bronze plans (10k or more) however it should reduce the premium costs by a substantial amount… Obviously not everyone qualifies for the hardship exemption but I think this might be a good fit for your situation specifically (especially since you don’t foresee the need for insurance to cover normal medical bills) and something other MMM readers might be able to take advantage of.

    Thanks for all you do.
    M

    Reply
  • Lisa November 5, 2017, 6:41 pm

    It is incredibly difficult to sue a doctor for malpractice, or a pharmaceutical company for negligence, as it is. Trust me, I’ve tried, and failed – not because I wasn’t injured, but because lawyers wouldn’t take my case (it’s a long story). If you are victimized by a doctor or pharmaceutical company being negligent, you deserve to be compensated for your losses. The medical industrial complex kills roughly 150,000 Americans per year and injures many more. The only way to make the system better is to penalize the people who mess up when they mess up – that’s why we have the justice system. Contrary to the false messages that the pharmaceutical industry is trying to sell, the high costs of medicine aren’t from individuals being litigious. The costs are outrageous because of the ridiculous inefficiencies in the insurance industry, pharmaceutical advertising and marketing budgets, and all the other reasons that you brought up that are keeping costs high and efficiencies low. So, I vehemently disagree with, “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.” It’s difficult enough for victims as it is to hold doctors or pharmaceutical companies responsible for the harm they do.

    Reply
  • Astrid November 5, 2017, 6:42 pm

    If I were you and your family, three healthy individuals who take care of their bodies, I would just get catastrophic insurance. Catastrophic insurance will pay for that odd circumstance of an devastating injury that leaves one of you in the ICU for a week or so. Or a pneumonia from the the flu that keeps you in the hospital for several days on IV antibiotics. I’m sure it would be much much lower.

    We have insurance though our employer since we are still working for the man and it’s ridiculously cheap. $150/month for five of us. It’s a trade off: not being retired vs paying ridiculous amounts for insurance. What a country!

    Reply
  • Astrid November 5, 2017, 6:45 pm

    Scratch that last comment. Seems catastrophic insurance is limited to those 30 years of age or younger – or those with an extreme hardship exemption. The system is stacked against us.

    Reply
    • classical_liberal November 10, 2017, 2:27 pm

      Astrid

      You would still have to pay the ACA tax penalty but decent insurance is available for VERY cheap. I use it regularly as a traveling contract nurse during periods of not working. I’m 41 male and can get a policy with max coverage of about a million 90/10 split with just a few thousand deductible for less than $100 a month.

      The HUGE caveat to this is that it does NOT cover preexisting conditions. So if you have a chronic illness its out, plain and simple. The policy periods are 3 mos at a time, so anything that happens (say you have a heart attack and need a cardiac cath) during the 3 mos is covered. However, upon renewal its a preexisting condition, so medication for the stent and cardiac rehab would NOT be covered in the subsequent policy period.

      For those that understand health care, without preexisting conditions, this type of insurance is a great option. It is cheap and covers “emergent care”, ie the proverbial piano falling. It gives you enough coverage time to then work out the details of any longer term follow up care via medical tourism or price comparison (Thanks MMM for sharing that bluebook, I’ve been preaching this to people for years). If the condition ends up chronic, one can always add an ACA plan during eligibility the next year if they choose to be treated in the US.

      Reply
  • AH November 5, 2017, 7:08 pm

    I might recommend checking out a series of blog posts at the Incidental Economist. They are from 2010, the year the ACA was passed, but still relevant and interesting. The author (Aaron Carroll) pulls apart reasons why health care in the US is so much more expensive than in other similarly wealthy countries, and makes a pretty convincing argument that common concerns like lifestyle diseases and excessive litigation are not actually the problem…though I would never be one to argue with fewer cars and more bike infrastructure :).

    https://theincidentaleconomist.com/wordpress/what-makes-the-us-health-care-system-so-expensive-introduction/

    Reply
  • RJ November 5, 2017, 7:28 pm

    When I read this I was frustrated.
    Then I felt momentarily relieved when I remembered that my healthcare is pretty cheap as long as I stay at my company…or some other big company…working full time…for my whole life…
    Then I got really frustrated.

    Reply
  • jess November 5, 2017, 7:41 pm

    Thank you for the sane and useful post, MM!!! I was just hit with similar email and wanted to share my solution. Briefly, considered similar options.

    Also briefly: Kaiser was way cheaper on their own site – if you go through Obamacare sites all the rates are super high now (sad, everyone has to jump ship). I was able to qualify for a ‘qualifying event’ (income sirpassing poverty level/ thereby losing my subsidy) and thereby qualify to change policies by Dec 1, to a HSA-qualifying plan. If Im in by Dec 1, I can make full contribution for the year, liwering tax. Also biz can pay ins like you noted.

    Medical tourism was a very very close second – Southwest now flies to Cabo! I think Ill reexamine this one. ☺️

    Reply
  • Ivan November 5, 2017, 7:47 pm

    This post highlights something that I”ve been grappling with over the past few years while reading this blog.
    I love this blog, and I’ve made significant changes to my lifestyle which were inspired by various ideas I found here.

    I am a practicing Catholic, and I find no mention of God here.
    It makes me wonder if the ideology I find here is going to move me towards God or farther from God.

    Again; if the proponents of this brand of frugality/minimalism are athiests, and typically say things that are 100% opposed to my values and world view, can it be truly good for me? And truly make me happy?

    In the same way MMM did not choose the Healthshare ministry, it makes me wonder if I should choose this brand of frugality.

    Just something I think about!

    Reply
    • Mr. Money Mustache November 6, 2017, 11:34 am

      That’s a great question Ivan!

      To avoid hiding anything, I’m definitely not religious and you’ll find that Mustachians are less religious than the general population on average, because there are so many scientists and tech workers (lower correlation to religion but certainly not exclusive).

      BUT – instead of judging each other based on our religions or lack thereof, we could choose to come together over a pool of ideas, and debate their relative merits for creating a better world. This is where a Mustachian philosophy overlaps very well with Catholic, Christian and other religions.

      After all, non-religious people like me believe that religions – all of them – were created by earlier civilizations grappling with how to make a better world and live peacefully together. Whether there were gods involved or not, we all tend to arrive at the same basic principles of being good to each other.

      Reply
    • Andreas November 7, 2017, 2:09 am

      So your thought is that because MMM did not choose the Healthshare ministry you should not choose MMM frugality and miss out? Why?

      My answer is yes it can be good for you. Like it was good for me to talk to a priest during some difficult times even though I am an atheist. We can help eachother out and not miss out because we have different world views. And by the way isn´t the christian way to help others and yourself? Not everything is or should be exactly to anyones liking. We humans are a mix and need to accept that and move on. Things are good and can get better even if the word “God” is nowhere to be found in the text. Helping others has no more or less value depending on if that helps comes from an atheist, muslim or a christian.

      Make others better, thats it.

      Reply
  • scott November 5, 2017, 8:26 pm

    Dude. Isn’t this much ado about nothing? Whether you like private health insurance, the ACA, or universal healthcare isn’t the underlying idea that you’re going to need a group of healthy individuals to shoulder the burden of costs for a group of unhealthy individuals, a wealthy (or at least high income) group to cover the costs for a poor group.

    Fortunately MMM is both healthy and wealthy.

    Given the poor health of the US population and the inefficiency of our medical care system isn’t this huge bill what you would want given the recent Conspicuous Consumption article. In other words, given that medical care in the US is ridiculously expensive and inefficient would you prefer the get the HUGE bill that reflects the cost of our collective poor health or would you rather the true cost be hidden by subsidies or higher tax rates or some other opaque mechanism?

    Reply
  • Bukske November 5, 2017, 9:19 pm

    As a physician, I can tell you one of the big reasons healthcare is so expensive is that patients have unrealistic expectations for their medical care. Americans want the best and most of everything just like when they go gorge themselves at their favorite fast food restaurant or all you can eat buffet. They think ‘everything’ should always be done even if the surgery or heroic attempts are futile. Excessive testing and imaging to cover your butt from litigation are rampant. It is less common for people here to actually pursue preventive medicine and annual health check ups, and instead try to fix things after they get way out of hand. I agree with a lot of the possibilities for making healthcare more affordable. I think outcome measures should replace litigation. I disagree about hours worked in residcnecy as I would in no way be well trained enough if I had not put in 80 hours per week. I also think physicians would care less about making money if the cost of medical education were not so expensive (many are coming out with 200-500k in student debt).

    Reply
  • Greg November 5, 2017, 9:53 pm

    People who understand the problem space need to use the term Healthcare and stop using the term Health Insurance. It’s simply not insurance, by the definition of insurance. Insurance is a bet a company places against an outcome – it thinks it will win each individual bet and it knows it will win the aggregate of bets. A company would never place a bet it thinks it would lose. Nobody will sell term life insurance to a 100-year-old. People with higher risk of death (cliff divers, and old people, for example) pay much higher life insurance premiums than others. It makes sense. None of this is true in Healthcare.

    You are correct that your premium doesn’t accurately reflect your risk. The other half of that is that the payer is repeatedly forced to place bets it absolutely knows it is going to lose on individual patients. So it’s not surprising that discussions about Healthcare the begin with the false premise that it is insurance are confusing and exasperating. People (particularly members of Congress) need to understand this. It also reinforces your final point.

    Reply
    • scott November 5, 2017, 10:28 pm

      Great point Greg. I sometimes wonder if we need to take your idea one step further. I think it can be helpful to make a distinction between healthcare and medical care. While I think of medical care as services provided by a medical professional (usually involving health insurance), healthcare is much broader. It is a function of many things that are potentially under our control such as lifestyle, sleep, diet, and exercise. As other posts have mentioned, such a large portion of our medical care costs are incurred for conditions that can be described as preventable.
      I find it interesting that people generally are very picky/opiniated about their health insurance policy, national healthcare politics, and the school name on their MD’s diploma and yet these same people would never consider eating a salad for lunch, giving up soda, riding their bike to work, or even going for a daily walk. The prevailing attitude is essentially, “I could care less about healthy habits, but I demand access to the very best doctors and treatments at a low cost.” It just doesnt make sense. I think it has to do with a combination of how we deify MDs and how we miss the important distinctions between health insurance/healthcare/medical care.

      Reply
  • Jon November 5, 2017, 10:30 pm

    The solution to this problem is the free market. That would make the cost of medical care 1/10th, at least, of what it is now. Read the book, *Healing Our World in an Age of Aggression*. Single Payer Health Care doesn’t work in other countries. It has its own problems. That’s why people in Canada still have to come down to the US to get medical care if they want to live otherwise they would have to wait in line like everyone else and be dead by the time it was their turn. You’re a smart person, figure it out, it doesn’t make since that a bureaucratic organization could be more efficient than the free market. Maybe it would be better than the current fascist/crony capitalist system we have now. Who knows. But if we want true good quality medical care at a reasonable price the only way is the free market. The Single Payer system just hides the cost and lowers the quality of medical care for all. It may be OK for the first generation but since it doesn’t have a learning mechanism like the free market it will slowly get worse and worse.

    And the policing that this country is experiencing right now, is OK – if you are affluent. But not nearly as good as if it were a free market. In a free market the people that you protect wouldn’t be afraid of you, like they are in the ghettos.

    Reply
  • Kristine November 6, 2017, 1:01 am

    This is terrifying! We hear so often in Norway about people who went for a vacation to the US and got an unexpected health issue which suddenly sent them hundreds of thousands of dollars in debt.

    Sorry, there are so many amazing places I’d like to visit, but that alone is just too terrifying a prospect for me, no matter how unlikely.

    Reply
  • Andreas November 6, 2017, 1:16 am

    I just have to ask, do you really pay / does it cost over $674-$961 each month?
    Is that really what healtcare cost each month. That amount out of your pocket?

    Am I missing something? Are you supposed to pay that monthly, or else bye bye if you get sick?

    Reply
    • Chuck Tuna November 6, 2017, 7:36 pm

      Yes. We pay $1237.64/month, every month, to have “Health Insurance”. We are: Dad 49, Mom 49, Daughter 12. All healthy, go to see doctor once per year. This does not cover eye care, nor dental care.
      I know it sounds crazy to you (I assume you’re not American), but this is reality here. We pay this amount, every month. MMM really pays that much every month.

      Reply
      • Andreas November 7, 2017, 2:26 am

        No deductibles or anything? Wow that is crazy!

        Yes I am not american but Swedish. Could you help me out understanding this, since I dont?
        Currently I am making $3 556 (using a currency converter) each month. This is somewhat average pay here. After taxes (30%) left is $2489, the difference is $1067.
        For comparison my apartment costs me $600/month and food $250.

        Just the tax alone are less than you pay for just health insurance. How much is the income tax in the US?

        If i go to the doctor here I pay $18 for the visit, and pocketmoney for any medicine.
        Currently on medication costing me max $20 every other month. We also have a “free pass” if costs go to high over a year, and that is currently $130/year, so if you go over that in patient fees the next visit is free.. (yes really)

        If I need surgery or anything it is more or less free! Eye and dental are another story but anyhow pretty affordable. I have dentalinsurance for $12/month. but contactlenses/glasses will have to come out of my own pocket. But if I break my leg or i injure my knee I am going to be taken care of, at no real cost. The difference here is astonishing.

        How much do you make each month? Are your salaries that much higher? What I have learned is s that US citizens low wage is so low that people need two or three jobs just to get by.

        Just trying to grasp..this has been bothering me for some time and I finally have asked someone.

        Reply
        • MKE November 9, 2017, 11:35 am

          I have read articles stating that now the per-capita income in countries like Canada and Sweden is higher than in the US. So we do not typically make more. Your taxes are a little higher. In my state, the healthcare insurance costs are about $500 per person per month, assuming a deductible of 5,000 to 10,000. No, the insurance does not cover much.

          Medicine is bankrupting our nation. I don’t think you could ever grasp the predatory nature of it.

          Reply
          • Andreas November 13, 2017, 1:17 am

            So 25% or more of your salay goes direct to healthinsurance?

            Reply
            • Lauren November 14, 2017, 7:21 pm

              Most people have access to less expensive options through their employer. MMM readers are disproportionately early retired or self-employed, so we don’t qualify for insurance programs for senior citizens or the very poor, and can only purchase insurance on our own. If you household income falls within a certain bracket (roughly $20-65k), you qualify for tax subsidies (what we are referring to as Obamacare or ACA, same thing).

              Basically, if you don’t have a normal 9-to-5, you don’t make less than $64k, and you’re not so rich that money isn’t a factor, our insurance system is a significant burden. Right now my husband and I make less than $100k. We live very comfortably and I freelance from home, but I’m now planning to go back to work simply to cut down my insurance costs. Otherwise, yes, if we had a child (or gasp two or three), our insurance would easily eat up 25%+ of our income. It’s close now with just the two of us.

              Signed,
              A Bitter American

              Reply
  • Spaniard November 6, 2017, 2:45 am

    Hi MrMoneyMustache!

    Great blog first of all.

    I’m just going to throw another option from my ignorance about the US healthcare system. What about building your own, non for profit, healthcare insurance? I have some insurance schemes like that in Europe.

    Regards

    Spaniard

    Reply
  • BobJ November 6, 2017, 2:56 am

    Mine just went up from 798. to 1028. However, this year alone I (60 years old) had brain surgery and prostate surgery. My wife (58 years old) had Sepsis which resulted in 3 hospital stays and over $495K in hospital/medical bills. The insurance paid all but $2300. (my share).
    My 2 points:
    1) I’ll pay the insurance.. hopefully it (costs) will get better in the long run. But a year like we had could financially wipe out anyone.
    2) And I don’t agree with MMM assessment that the “current” administration is raising bills to end Obamacare.
    Obamacare was started and the rate were wildly going up before the last election.

    BobJ

    Reply
  • Inside Sales Dude November 6, 2017, 4:32 am

    Thanks for the post – I was thinking of emailing you to write about this.

    I just received my 2018 ACA rates here in South Florida. My best plan went from $428 /month to about $768 for a man aged 49 (with no subsidies).

    After being laid off last year, I started a consulting business so I am self employed. I did well in 2017 but have no idea how much business I will do in 2018. So $728/month is a lot to me. I am fortunate to be healthy, very active, eat well, etc. I rarely see a doctor preferring to use CVS MinuteClinic for Flu vaccines and occasional strep throat treatment.

    I did the same analysis of the options that you did. For me an HDHP for catastrophic coverage would be great (like ehealth used to offer in pre ACA days)- but I cannot get that here. I’d rather shop for prices, be very discriminate in the medical services I purchase and use insurance not for routine care but for unaffordable emergencies.

    In my case, I am strongly considering Liberty Healthshare because I have a fixed monthly rate of $199 and a known deductible of $500. Setting aside the religious/moral part, my concerns are:

    1) Will they pay out if I have a catastrophic claim? (eg. I get seriously injured in a car accident and have bills well over $5000)
    2) How much of a pain in the a$$ will it be to get a health care provider to work with Liberty (or me) through the claims process?
    3) Is this whole thing a Ponzi scheme? I really like the entire idea of how it works but is it too good to be true? WHo is really behind this and will they back up what they say?

    Interestingly, I can say that having dealt with significant health insurance claims with my wife, my experience is that they default to “deny payment first” and then make it a major hassle to get things paid. Perhaps this is the true Ponzi scheme.

    Does anyone have any real life experience with Liberty Health share?

    Reply
  • Peterperlygates November 6, 2017, 4:57 am

    Solution: MMM, if you come to Canada for 6 months of the year, you can use your Ontario health insurance. Free for residents. Since you and your wife have Canadian status, it’s all legit. Then visit a nurse practitioner led clinic to get your health care. That’s an example of giving nurses and nurse practitioners more power. BTW some nurses are able to prescribe in Ontario too. So your high cost medical insurance has been cut to zero dollars and zero cents.

    Reply
  • Knapptyme November 6, 2017, 5:22 am

    Subsidies for low incomes would be nice if there wasn’t a “family glitch” in the ACA system. If the low income employer offers healthcare options for the family, there are no subsidies available for the family. For example, I recently became a stay-at-home-dad, instead of teaching, and my wife continues to teach. The company plan would be tax-exempt, but comes in at roughly $800 per month where subsidies at our income level should make it $300-400 per month.

    The state sponsored plan for kids is $20/month, and I’ll be using that for the kiddos. As for me, I’m taking the self-insured risk and changing my diet considerably (nearly vegan) as my defensive medicine. I can’t totally prevent an accident.

    Side note: the private healthcare industry, which I tried to go with at $350/month, denied me for pre-existing conditions anyway.

    Reply
  • sciliz November 6, 2017, 5:33 am

    Wait, isn’t the main exemption if the lowest-cost premiums would cost more than 8% of your income? So are you saying you are early retired, you can control your income in any given year, and you want to have $150k in income (or more) and you want to pay less than 12k for premiums out of that sum?
    What am I missing?

    Reply
  • Coop M November 6, 2017, 5:40 am

    Same boat as you MMM, but I didn’t see anyone mention what we did.

    I’m a healthy high income sole proprietor with two healthy kids and a healthy spouse. Our bronze plan premiums were priced at $1,000/mo.

    One problem with self insurance / medical tourism is you are not in a position to travel or shop in the event of a true catastrophic injury (i.e. if I get hit by a car while biking), so I wanted insurance.

    We ended up getting a short term insurance plan (12-month plan) with nearly identical benefits from the same company on a lower deductible for the entire family for about $150/mo (1/10th the cost!). Yes, they can drop me after a year, but if something really bad happens and I get dropped, I’ll just sign up for the ACA plan which can’t deny me. I did have to pay the penalty, but the net result was insurance coverage for about the 1/3 of the cheapest bronze plan.

    Reply
  • markbike528cbx November 6, 2017, 5:42 am

    good to see MMM catching up on this topic FINALLY. :-)

    http://forum.mrmoneymustache.com/welcome-to-the-forum/self-insured-specifically-health-insurance/

    TL;dr. by $1M you’re cured or dead. If you have more than that, self insurance is a consideration.

    Reply
  • Janine November 6, 2017, 5:51 am

    I would like to see an incentive and cost savings for individuals that do practice a lifestyle that decreases their odds of developing expensive chronic conditions (e.g. type 2 diabetes, cardiovascular disease etc) I have spoken with an individual who works for a company that is developing a ‘loyalty points” system that insurance companies and individual companies can utilize. Individuals are given a pedometer and a card they can use at the grocery store. When they exercise and purchase healthy food they are rewarded with points. Those points can then be used as a savings off their insurance rates, or put towards exercise equipment (running shoes, gym memberships). As a Canadian – I would like to see our provincial health system adopt something similar. Mr. Mustache, I see that you are a Canadian ex-pat. Let’s be honest, that is your ultimate “insurance plan”. Even though you might not have plans to move back, if you or your family develops a catastrophic condition, I’m sure part of your strategy would be to move back for the government health plan. That does allow you to be a bit cavalier on your insurance choices that you are now making in the USA. Many of your American readers don’t have that option.

    Reply
    • Janine November 6, 2017, 6:01 am

      A great reference is the Cardiff Study. The study identifies five healthy behaviours as being integral to having the best chance of leading a disease-free lifestyle: taking regular exercise, non-smoking, a low body weight, a healthy diet and a low alcohol intake. http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0081877

      There is also the concept of “the know to do disconnect” – we all KNOW the things we need to do to be healthy, so why don’t we DO them. People respond to incentives, this might be a mechanism to change behaviour.

      Reply
  • Patrick November 6, 2017, 6:12 am

    I agree with Mrs MM on this. Your decision making process was rather silly. Your health insurance premium is high because by all objective measures you’re rich, making income in the top 1%. So you’re subsidizing the health insurance of everyone else. If you want to pay $128/month, simply stop making income you don’t need.

    I would like to learn more about medical tourism. If you have a heart attack or stroke, what are you going to do, ask the ambulance to drive you to the airport so you can take a flight to Costa Rica? It seems like medical tourism is only useful for the things I’m not buying the insurance coverage for in the first place – ie, massive unexpected life-threatening diseases.

    Your analogy to car driving and obesity is logically flawed however – you’re arguing because a person takes some risks, they should be willing to take all risks. That’s an equivalence fallacy.

    Still, a lot of good info here and I like your ideas in the Footnotes.

    Reply

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