The High Cost of Health Insurance: Talk v. Action

My background is research. Inquiring minds really do want to know, and with a few phone calls and quality time on the Internet, you can find out a lot.

In my work, I’ve run into three types of people:

  • Those who charge high prices for health insurance
  • Those who complain about the high prices for health insurance
  • Those who do something about it

Yes, really, the third category exists. Apart from the Marketplace, I know of at least two good ways to cut costs dramatically without skimping on coverage. These are solutions provided by established organizations, not something I’ve cooked up. However, most people don’t know about them.

Best of all, they don’t involve any political uncertainty. “Trump” is not part of the vocabulary for these solutions.

I’m not going to explain them here, because I might run afoul of regulators saying that I’m providing insurance advice in a state in which I haven’t paid for a license yet.  (I’m licensed in NJ, PA, MO and VA.) If I don’t handle your area, I will still tell you what the solutions are and provide a referral to someone who can help you.

So if you want more information, you’re going to have to call or email me.

609-510-3712

vic@craininsurancellc.com

This is my way of trying to be useful.

Vic Crain

Small Business Health Insurance: Missing the Point

The Centers for Medicare and Medicaid Services (CMS) issued a press release on 15 May, mark_twain_congress_quote-511892offering new ways for small businesses to enroll in health insurance in addition to the SHOP marketplace provided by the ACA. The release also took the opportunity to make some partisan jabs at the ACA and the low rate of participation by small businesses in SHOP.

As an agent certified in SHOP, the CMS press release shows a complete misunderstanding of the problem. Think of the choices businesses face:

  1. You can buy policies for your employees at full price through SHOP.
  2. You can reimburse employee costs for purchasing subsidized health insurance by using an HRA and or HSA  as revised in December.
  3. You can buy much lower  cost policies using a hybrid self-insured approach.

The first method provides no financial incentives — so why do it?

The new options offered by CMS provide no financial incentives — so why do them either?

However, for CMS now to say that the ACA has been ineffective in serving small business is unfounded. CMS doesn’t in fact know how many businesses have chose Option 2.

Of course, the virtue of Option 3 is that politicians have nothing to do with it.

The major barriers facing most business owners with options 2 or 3 is awareness — they don’t know these options have been available.  However, they are, and they could save a lot of money.

Only politicians could design a program with no value and then wonder why no one is using it.


Sources:  Centers for Medicare and Medicaid Services Offers New Health Coverage Enrollment Option for Small Business, Press release, 15 May 2017.   

Anyone want to move to Hawaii?

United Benefit Advisors has produced this chart showing group health insurance costs by state.

It should come as no surprise that the Northeastern US is the most expensive area of the country for group health insurance.  However, the amount of difference in cost might be a shock.

These are 2016 figures.  The numbers for 2017 are a little  higher, and we expect the numbers for 2018 to increase by more than 15%.  These are costs under group heath insurance policies.  The cost for individual policies will be slightly higher (before the ACA subsidy is applied).

2016 Monthly Premium by state Chart.jpg

The Economy: Back to the Future

Have you heard the advertising mantra, “Perception is reality”? It’s not. Reality is based on data that isn’t subject to twisting by political pundits — for example, a rapid growth in inventory of unsold cars and trucks at US dealers. The election brought about a rally in consumer confidence and in the stock market without […]

via The Economy: Back to the Future — CRAIN’S COMMENTS

Trump’s Actions on Healthcare to Date

Medscape offered a good review of Trump’s initial executive orders regarding healthcare.  ben_franklinI’m not going to repeat the article word-for-word here — just recap the basic points and what they might mean for you:

  • They are largely non-specific recommendations, leaving actual implementation to each agency.  Since most of the new Cabinet heads aren’t confirmed as yet, this is going to play out over time.
  • The executive order could end penalties for not having health insurance.  That sounds good until you realize that it will drive up the cost of health insurance for everyone else.  The notion of risk pool is that healthy people balance out the ill.  If you allow people who don’t use much health services to withdraw from the pool, the cost burden is born by the smaller number of people remaining.  It’s simple math.
    • On notion starting to be discussed is the idea of a “high risk” insurance pool for people with chronic health conditions.  This was tried in a number of states in the past for both health and auto insurance and failed in both areas.  States discovered that they were on the hook for budget-breaking sums and the cost to individuals soared.  (See Politz article, in sources, below.)
  • States will be given greater latitude to determine who qualifies for Medicare and CHIP assistance and what assistance these programs actually provide.  That’s OK if you live in the Northeast or West Coast, and not so good elsewhere.
  • Health insurance will be sold across state lines.  That’s a questionable benefit:
    • It reduces the power of state insurance commissioners, which could be a good thing.
    • The impact on the actual cost of insurance is questionable.  Take New Jersey, for example.  Residents will have more policy choices available, but those policies now sold in Pennsylvania and New York have higher prices than New Jersey allows.  It seems unlikely that a carrier that sells in both NJ and PA will bring a lower priced policy from NJ to consumers in PA.
  • It will repeal taxes imposed on pharmaceutical companies and insurance carriers.

Bottom line:  The initial actions favor insurers and pharmaceutical companies at the expense of consumers. Health insurance prices will increase this year.  The Congressional Budget Office estimated that Trump’s actions would double the cost of health insurance over the next 10 years.  That may be an underestimate.

However, I don’t suggest running out to buy stock in these companies.  The theme over the last decade is that draining consumer wallets is a good way to bring the economy to a halt and, eventually, crash the stock markets.  It’s been done before.

It’s time to cut your expenses and save as much as you can.


Sources:

ACA Reform: the newest wrinkle

OK, it’s widely understood that “ethical Congressman” is an oxymoron if not an entirely extinct species.

Georgia Representative Tom Price is a Congressman.  He also invests iskunksn medical technology and pharmaceutical companies to the tune of about $300,000.  He also introduces bills and writes letters to regulators to help the companies whose stock he owns — boosting the value of  his own investment.   In turn, the companies donate to his re-election campaigns. (The Wall Street Journal first broke this story in December; CNN added new information today.)

Basically Tom Price is a poster child for “conflict-of-interest.”  Government is supposed to be “for the people”, not for your own wallet.

Price is also Trumps nominee for Health and Human Services Secretary and Trump’s designated leader on ACA reform.

If he’s leading the charge, just who is the real beneficiary of ACA reform going to be? 

In fairness, Price says that if he gets this new job, he will get rid of all of his stocks within 90 days.  However, he’s been in Congress for 11 years, with a consistent pattern of behavior.  That’s going to change overnight?? Plus ACA repeal reportedly will occur before he has liquidated his stocks, if it happens as promised.

Of course, the voters of Georgia share the blame for this mess. You elected someone five times who has consistently violated ethics rules.  How exactly does that work?   

Price’s original proposals for ACA repeal included the following five elements (quoted from NPR article cited below):

  1. Price’s plan offers fixed tax credits so people can buy their own insurance on the private market. The credit starts at $1,200 a year and rises with age, but isn’t adjusted for income. Everyone receives the same credit whether they are rich or poor. People on Medicaid, Medicare, the military health plan known as Tricare, or the Veterans Affairs’ health plan could opt instead for the tax credit to buy private insurance.
  2. Price advocates for expansion of health savings accounts, which allow people to save money before taxes to pay for health care. This includes allowing people who are covered by government health programs including Medicare and the VA to contribute to health savings accounts to pay for premiums and copayments. These proposals are included in Ryan’s plan.
  3. People with existing medical conditions couldn’t be denied coverage under Price’s plan as long as they had continuous insurance for 18 months prior to selecting a new policy. If they didn’t, then they could be denied coverage for that condition for up to 18 months after buying a new plan.
  4. The Price proposal limits the amount of money companies can deduct from their taxes for employee health insurance expenses. Companies can deduct up to $20,000 for a family health insurance plan and $8,000 for an individual. The goal is to discourage companies from offering overly generous insurance benefits to their workers. Ryan’s plan proposes a cap on the employer tax deduction but doesn’t specify the level of the cap.
  5. States would get federal money to create so-called high-risk pools under Price’s plan. These are government-run health plans for people with existing medical conditions who can’t get affordable health insurance on the private market. Critics say high-risk pools have been tried in as many as 34 states and largely failed because they were routinely underfunded.

Given that a Silver level ACA plan in NJ can cost upwards of $900 per month, a $1,200 annual credit doesn’t amount to much. And why should the credit be the same for a millionaire as for someone making minimum wage?  The pre-existing condition rule means that some people with long term health issues will be excluded from coverage. 

Finally, do Price’s ethics issues have anything to do with GOP efforts earlier this month to reduce or eliminate the independent Congressional Ethics Office? 

The Affordable Care Act (aka Obamacare) repeal is turning into a circus.  I’m sure there are more acts to follow.


Sources:

  • http://www.cnn.com/2017/01/16/politics/tom-price-bill-aiding-company/index.html
  • http://www.npr.org/sections/health-shots/2016/11/29/503720671/5-things-to-know-about-rep-tom-prices-health-care-ideas
  • http://ktla.com/2017/01/16/trumps-hhs-nominee-introduced-legislation-to-help-company-soon-after-investing-in-it-house-records/
  • http://www.msnbc.com/rachel-maddow/watch/ethics-questions-loom-over-trump-hhs-pick-rep-tom-price-839983683992
  • http://www.wsj.com/articles/donald-trumps-pick-for-health-secretary-traded-medical-stocks-while-in-house-1482451061

Healthcare: what you do need to do now

Donald Trump promised today that there will be “healthcare for everyone” after repeal of the ACA. He can actually do that very easily and cheaply, by cutting back the healthcare provided to “catastrophic” coverage. This category of plan exists today, but almost no one actively sells it because if provides very little value to the […]

via Healthcare: what you do need to do — CRAIN’S COMMENTS

ACA Reform

If you have insurance coverage through the Marketplace, the key advice right now is —

DON’T PANIC.logo@2x.png

While, to paraphrase Mark Twain, the word “congressman” is a synonym for “idiot”, it’s unlikely that we’ll see sweeping changes in the near future.

  • Congress is using a special procedure to “repeal” the Affordable Care Act (also known as Obamacare).  In fact, using that procedure, they can only repeal a portion of the law — the portion that involved direct Federal spending and tax penalties for individuals and businesses.
  • Many smaller hospitals are just as upset as consumes about losing Federal subsidies for healthcare.  The can’t afford returning to the burden of treating the uninsured.  Since the medical community is such a huge donor to Congress, they will want their say in hearings before Congress acts. So will insurers, the AARP and other groups.  That takes time.
  • Several analysts have speculated that there will be some kind of “bridge” legislation to keep the current system running until they can come up with a revised system.  That would be sensible.  But then again, this is Congress.

The bottom line is that we need to know what the facts are before we can figure out what is best to do.  Until the dust settles, we just don’t know.

Any replacement system will require legislation that will be subject to filibuster.  For that reason, it will require support from both parties to put it in place.  That’s simply going to take time.  I’d be modestly surprised if we actually had a replacement system before 2018, and if passed then, it wouldn’t take effect until 2019.  But we’ll see.

However, panic over the law could trigger a pull back in spending by consumers.  Another recession?  We’ll see.

By the way, if you haven’t read Mark Twain — particularly his cynical “Letters from the Earth” — you really should.  Most of what he said about people and  especially politicians is still true.  He’s just a lot more humorous in how he says it.

 

Discrimination in Healthcare — CRAIN’S COMMENTS

45% of patients with advanced rectal cancer don’t receive the recommended treatment for this disease. Rectal cancer is a problem. Forecasts call for 39,000 new cases of this type of cancer in the US by the end of this year. Rectal cancer is the largest subcategory of colorectal cancer, and is the second leading cause […]

via Discrimination in Healthcare — CRAIN’S COMMENTS

Older Men and the Women Who Love Them, More — CRAIN’S COMMENTS

Cleaning out my mailbox, there was an article on this in Science Daily from earlier this year that’s important for older men and the women who love them to know. Low testosterone levels complicate recovery from hospital stays, according to a study from the University of Texas. Testosterone levels fall in men after age 40 […]

via Older Men and the Women Who Love Them, More — CRAIN’S COMMENTS

Medicare Supplement and Medicare Advantage — Do You Know the Difference?

Do you know anyone turning 65?  Do you know anyone 65 or older who would like help figuring out which insurance options make the most financial sense for them?

Supplements cover medical expenses that basic Medicare doesn’t.  Advantage plans replace the basic Medicare plan and add additional coverage features.

Everyone needs one of these options, and they need not cost a fortune.  However, the choices aren’t one-size-fits-all, and the prices vary between carriers.  It can be confusing.

I can help.  Have them call me.

Insurance for the disabled

This is a subject I’m working on now.

Insurers have no problem writing life and disability policies for healththlx3t6c8yy people.

However, getting insurance for someone who starts as disabled (e.g., autism, brain injury) is a challenge.  Certain states make that even more difficult.  For example (thank you Governor Christie), it’s illegal in NJ to write certain types of insurance for people on Medicaid.  If you’re poor, the state makes it harder to dig yourself out.

thzaeabdiqHowever, there are solutions.  As an agent, I have to dig to find them.  Most consumers wouldn’t know where to look.

Happily, I’ve always enjoyed doing research.  It’s my calling.

By the way, there are people who invest in life insurance at age 18, before there’s an opportunity for much to happen to them.  They’re smarter than I was.  If healthy, they have more options and policies are very low cost.

This is an insurance/health focused blog.  I have a related blog at “Crain’s Comments” (vlcrain17.wordpress.com) that addresses a range of additional topics in writing, finance, technology, science and medicine. 

Health Insurance: the Uniquely American Jungle

VCphoto2To paraphrase a quote from a friend, it doesn’t matter who helps you with insurance until it does.

There’s no single policy or company that provides “complete” health insurance in the US.  Truly complete coverage involves stitching together policies from multiple sources while keeping costs manageable.  It’s the insurance version of quilting.

Your daughter breaks her arm playing basketball at school.  The doctor’s bill is $1200.  How are you paying for it?

You’re overdue for a colonoscopy.  Do you know that the cost can vary wildly depending on where it is done?  Will you be out of pocket for this or will your insurance cover the cost?  Do you know?

In medicine, it is the case that “an ounce of prevention is worth a pound of cure.”  Catching any illness in the early stages of development makes it easier and less costly to treat.  Most Stage I cancers are easily treatable at little cost; most Stage IV cancers are fatal and very expensive to treat.

For consumers, this means that annual check-ups aren’t optional.  doctor-clip-art-doctor-clip-art-4Nor are mammograms, colonoscopies or esophageal endoscopies.   By the time you become aware of a blockage of the esophagus (without a screening), it’s Stage IV and your five-year survival rate is less than 10%.  You’re basically done.

The problem for consumers is being able to pay for check-ups and screenings.  That’s where the fine print in your health insurance becomes critically important.  Some policies will cover screenings and some don’t.  If your policy doesn’t, and you have a high deductible, you could be liable for thousands of dollars in costs.

As the New York Times reported (10/17/2014 and 11/15/2015), there are consumers who have health insurance and still can’t afford to see the doctor.  They can’t pay the deductibles and co-payments, so the simple act of buying insurance becomes largely irrelevant.  The Affordable Care Act (aka ACA or Obamacare) simply didn’t go far enough to solve the problem of affordability.  A lot of that is related to accommodations required to overcome resistance to passing the law.

There are some resources, although some in Congress and the states are trying to cut the budget for them.  Planned Parenthood provides mammography for poorer women, but has become a target for other services in which it is involved.  There are also public health clinics, but these are only in limited locations.

Ultimately, the consumer is faced with an array of options and costs:

  • Private insurance, Marketplace insurance, Company-sponsored insurance or no insurance
  • Low or high deductibles
  • Low or high co-payments
  • Whether to include options such as dental, vision or supplemental health insurance
  • Choice of insurance company
  • Choice of doctor and hospital
  • Whether insurance covers travel out-of-state (some plans don’t)

Even seniors have to make choices between Medicare, Medicare Advantage and Medicare supplement plans.  Nothing is simple anymore.

Very few people can afford the high-end plans that cover everything with next to nothing out of pocket.  Even in the Marketplace, such plans can cost upwards of $2,000 per month, which is more than a  lot of people make in a year.  That’s higher than most mortgages.

That brings us back to the question of who advises you about health insurance.

  • Most agents are sales reps, trained to sell a particular policy and not necessarily familiar with the options that consumers may have.
  • With substantial turnover among agents, a lot of agents you meet will have been in the business for less than a year.  Some of these will make mistakes in presenting what their own policies do and don’t do.  That’s not a criticism.  Think about it: that’s why there are learner’s permits for drivers.
  • Under a new and controversial rule, investment advisors are required to place the well-being of the consumer ahead of the advisor’s financial interest.  There is no similar requirement for health insurance agents, although there should be.

So you can either hit the books and become an expert in health insurance yourself, or find someone who is.

There are agents with experience, knowledge, and who place the well-being of the consumer first.  We’re not perfect, but if we don’t know something, we tell you and then we do research and find the answer for you.  We don’t rush you into purchase decisions, but when we work together, we design a plan or set of complimentary plans that will take care of what you, your family and your employees need within your budget.

We’re here to help you complete your insurance quilt.

Vic Crain
Partner
Crain Insurance
vic@craininsurancellc.com
609 510-3712

Drug Price Reform — When, Not If

Brand name drugs are expensive.  They’re more expensive in the US than elsewhere, but they’re still expensive, regardless.

Prices are based on a number of factors, including what manufacturers think they can get insurance companies and governments to accept.  List prices are paid by consumers without health insurance.  Insurers and government programs pay negotiated rates often substantially below list.

Prices are supported by patent and exclusivity laws that protect original manufacturers.(2)  The US is the leader in this, to the point that drug companies will discard work on promising medicines if they believe they cannot obtain patents for them.(1)  For US consumers, it means they pay higher prices than people in other countries for the same drugs from the same manufacturers.  Congress has also made it illegal for US consumers to buy drugs elsewhere and bring them into the US.

“The current model for cancer drug pricing is not sustainable and harms patients and families as well as our health care system.” (5)

“Americans with cancer pay 50 percent to 100 percent more for the same patented drug than patients in other countries. As oncologists we have a moral obligation to advocate for affordable cancer drugs for our patients.”(6)

Take GSK’s Advair inhaler as an example.  The cash price of the 500/50 version of the inhaler for a consumer without insurance in the US is between $560 and $600 for a one-month supply.(3)  The price for the same product in Canada is $84.00.(4)  Some US consumers with insurance will pay a higher copay than the cash price in Canada.  With Horizon Omnia, I was quoted a price of over $300 for this drug by the pharmacy department at Wegman’s.

Prices are becoming detached from research costs.  The price for insulin for the treatment of diabetes has tripled in the last decade, despite the fact that the product has been largely unchanged for decades.(7)  (Synthetic insulin was introduced in the US in 1982, following development in India.)

More increases apparently are pending.(9)

Some people are angry about pricing, and one country is finally taking action.  Colombia has ordered Novartis to lower the price of its leukemia drug, Gleevec.  If the company does not comply, Colombia has threatened to break the patent and issue licenses for production of a generic version of the product.  According to Fox News, members of the US Congress are involved in lobbying the Colombian government to protect the drug company.  US Senator Orin Hatch of Utah is one of the people named in the news report as having close ties to the pharmaceutical industry.(8)

Whether Colombia breaks the current pricing model, or it happens elsewhere, it’s just a question of time.  Current prices are artificial and based on government intervention in the markets, and not on free market economics.

However, that’s the paradox that some conservative politicians like to ignore:  one is against government controls unless the controls lead to higher profits for your friends.

 

 


Sources:

(1) Frakt, Austin. “How Patent Law Can Block Even Lifesaving Drugs,” The New York Times.  28 Sept. 2015.  http://www.nytimes.com/2015/09/29/upshot/how-patent-law-can-block-even-lifesaving-drugs.html?_r=0

(2)  “Frequently Asked Questions on Patents and Exclusivity.”  US Health and Human Services, Food and Drug Administration.  http://www.fda.gov/Drugs/DevelopmentApprovalProcess/ucm079031.htm#How%20many%20years%20is%20a%20patent%20granted%20for?

(3) GoodRX.com.  http://www.goodrx.com/advair-diskus?form=inhaler&dosage=500mcg-50mcg&quantity=1&days_supply=&label_override=Advair%20Diskus

(4) Canada Pharmacy Online.  http://www.canadapharmacyonline.com/DrugInfo.aspx?name=Advair+0042

(5) Fred Hutchinson Cancer Research Center. “Expert opinion on how to address the skyrocketing prices of cancer drugs,” Science Daily.  12 February 2016.

(6) Mayo Clinic.  “Oncologists reveal reasons for high cost of cancer drugs in U.S.”  Science Daily.  16 March 2015.

(7) University of Michigan Health System,  “Sugar shock: Insulin costs tripled in 10 years, study finds,”  Science Daily.  5 April 2016.  https://www.sciencedaily.com/releases/2016/04/160405122030.htm

(8) “Colombia battles world’s biggest drugmaker over cancer drug,” Fox News Health.  18 May 2016.  http://www.foxnews.com/health/2016/05/18/colombia-battles-worlds-biggest-drugmaker-over-cancer-drug.html

(9) Frellick, Marcia.  “17 Essential Drugs at Risk for Price Boost, Analysts Say,” Medscape. 19 May 2016.  http://www.medscape.com/viewarticle/863544?src=wnl_mdplsnews_160520_mscpedit_wir&uac=153634BV&impID=1103558&faf=1

C-Section Cons and Pros

TheVCphoto2 C-Section rate is an important criteria in selecting an obstetrician.  Neither the decision to do the procedure nor the choice of doctor are trivial, but they are related.

The C-Section is the most common surgery performed in the US.  The primary factor determining whether this procedure is performed is the doctor and hospital the woman chooses, and not medical need.(7)  The rate of Cesarean births was 4.5% when first measured in 1965; it was over 32% in 2014.  As of 2014, Louisiana and New Jersey led the US in the highest rate of C-Sections — over 38%.(7)

The increase in C-Sections hasn’t made childbirth safer for either pregnant women or the newborn.  The rate of maternal death in childbirth has doubled since 1985, from 7.4 to 17.8 per 100,000 births.(9)  However, there is a question about how much of this increase is real or do to changes in government reporting.(6)

The rate of newborn mortality in the US is slightly worse than the rate in Bosnia.  According to the CIA World Factbook, the US rate is 5.87 per 1,000 births (2015 estimate).  There are more than 50 countries with lower rates of newborn mortality, including Canada, all European countries, all Commonwealth countries, Singapore, Taiwan and South Korea.

A survey of new mothers in 2011-12 found several reasons for the increased use of C-Sections, including

  • Physician or hospital unwillingness to inform the patient about options
  • Hospital and doctor efficiency
  • Limited awareness of surgical risk
  • Blind faith in medical professionals
  • Doctors’ unwillingness to attend births in the middle of the night (4).

However, unnecessary C-Sections are expensive for insurers, resulting is a push not to do them.

In one case part of which I witnessed, a physician decided to delay a C-Section in the hope of a vaginal birth on a woman with a previous history of miscarriage.  That decision was catastrophic.  The placenta tore, the fetus died and the mother almost bled out.

Ultimately, the decision to do a C-Section should be based on medical prudence, and not on insurance, the doctor’s quality of life or hospital income.

What does birth cost?

Cost estimates vary wildly, depending on whether they focus on out-of-pocket expenses for the new parents or the total charge including what insurance pays, as well as by state.  (2)

How much the new parents pay depends on the kind of health insurance they have as well as any supplemental insurance.

What you can do?

If you are a loved one are involved in selecting an obstetrician, you need to quiz the doctor on how he/she makes decisions about doing these procedures.  If the doctor shows a clear preference for surgery in most cases, or expresses concern about insurance and costs, you need to find a different doctor.  The guiding consideration needs to be the woman’s medical condition and history, period.

Any “automatic” decision is probably wrong.  Even a carefully considered decision could be wrong.  There’s nothing trivial about these choices.

____

Sources:

(1) Almendrala, Anna.  “U.S. C-Section Rate Is Double What WHO Recommends,” Huffpost Parents.  http://www.huffingtonpost.com/2015/04/14/c-section-rate-recommendation_n_7058954.html

(2)”Average Charges for Giving Birth: State Charts.”  Transforming Maternity Care.  http://transform.childbirthconnection.org/resources/datacenter/chargeschart/statecharges/

(3)  CDC. “Births — Method of Delivery.”  http://www.cdc.gov/nchs/fastats/delivery.htm

(4) ChildbirthConnection.org.  “Cesarean Section.”  http://www.childbirthconnection.org/article.asp?ck=10456

(5) Haelle, Tara. “Your Biggest C-Section Risk May Be Your Hospital,” Consumer Reports. 13 April 2016.  http://www.consumerreports.org/doctors-hospitals/your-biggest-c-section-risk-may-be-your-hospital/

(6) Maron, Dina.  “Has Maternal Mortality Really Doubled in the U.S.?”  Scientific American.  8 June 2015.  http://www.scientificamerican.com/article/has-maternal-mortality-really-doubled-in-the-u-s/

(7) “10 states with the highest C-section rates,”  Fox News.  9 July 2014.  http://www.foxnews.com/health/2014/07/09/10-states-with-highest-c-section-rates.html

(8) Rappleye, Emily.  “The most common surgery in the world is often unnecessary — and this physician is out to fix it,” Becker’s Hospital Review.  16 May, 2016.  http://www.beckershospitalreview.com/hospital-management-administration/the-most-common-surgery-in-the-world-is-often-unnecessary-and-this-physician-is-out-to-fix-it.html

(9) Wallace, Kelly. “Why is the maternal mortality rate going up in the United States?” CNN.  11 Dec. 2015.  http://www.cnn.com/2015/12/01/health/maternal-mortality-rate-u-s-increasing-why/

 

 

 

 

Warning regarding Wellness Plans that offer “tax free” incentives to participants

Quoting from a statement issued by Aflac, 9 May 2016:

“Aflac has been approached by companies such as Cypress, Inspired, Traverse, and Bene-Fit regarding wellness programs that claim to provide tax-free payments to employees who participate in the wellness program. The core elements of the wellness program involve a two-step process:

(1) A salary reduction election by employees through a Code Section 125 cafeteria plan, as payment for the cost of the wellness plan.
(2) A payment from the wellness plan, sometimes through a “benefit bank,” to employees which purportedly is on a tax-free basis.

The program claims the tax savings generated from the wellness plan may then be used to purchase additional benefits, such as the supplemental health benefits offered by Aflac. The Internal Revenue Service (IRS) has indicated the claimed tax advantages aren’t available under the Internal Revenue Code. These programs have also been reviewed by Aflac’s Legal Division and its outside counsel. Federal tax law doesn’t provide an exclusion from taxable income that would permit a tax free reimbursement under the wellness program. Aflac also believes these programs pose compliance problems under the Affordable Care Act, the Employee Retirement Income Security Act of 1974 (ERISA), and other federal laws.”

In other words, Federal tax incentives to encourage people to be healthy don’t exist yet.  There are salespeople promising tax breaks that may not be real.

Sanity, Finances and Supplemental Insurance

Realistic thinking and an ounce of prevention can give you a happier life.  If it sounds simple, it actually is.  It’s harder to change one’s mindset than it is to take the actions that are needed.

Most Americans, and certainly older ones like me, grew up with several assumptions about how our lives would play out.

(1)  Income will increase over time.  Taking on debt now is OK, because you can pay it off with increased earnings in the future.

(2) Housing is an investment.  The value of housing will increase.  Buy as  much as you can afford now, and make money when you sell.  Take on an equity loan now, and the growth in value will enable you to sell, cover the loan and still make a profit.

(3) Kids will do better financially than their parents.  In  your old age, your kids will be able to help you if needed.

(4)  Social Security is there to cover basic expenses in retirement.

(5)  You will be able to retire and enjoy yourself in your later years.

Like the Easter Bunny, these are wonderful myths.  However, trying to live as if they were true is a quick path to what some analysts call, “money depression.”(1)  That in turn is linked to problems with relationships and health.(2)

That’s the deadly spiral:  money problems can trigger depression, which can trigger health problems, which can add to money problems.

The blind faith in the future is what enables people to spend everything they earn and dive into debt.  It’s why almost half of Americans admit they would have trouble handling even minor financial emergencies, like a $400 medical bill.(3)

The new era of “living within one’s means” requires three things:

(A) Realism about the lifestyle one can afford

(B) A realistic budget

(C) Resources to deal with “the inevitable unexpected”, so that these don’t siphon off money you need for other things.

Item (C) is where supplemental insurance fits.  No one expects to get sick or have an accident, but the average American spends over 9 years of his/her life dealing with illness or injury.(4)  No one expects to have an accident.  Most cancers in the US are now attributed to environmental rather than genetic factors.(5)  You simply cannot plan on staying well.  That’s not something you fully control.

Supplemental insurance works by providing cash to those who are hurt or ill.  The cash is paid to the insured rather than to healthcare providers, and can be used to meet health insurance deductibles and copays, as well as to pay living expenses while ill.

Supplemental insurance makes sense for most people because it is very low cost.  Policies start at less than $20 per month for individuals, and less than $40 per month for families.

Financial peace of mind means having a budget that works and knowing that you are protected to the extent possible against the “inevitable unexpected.”  Once you achieve financial peace of mind, you’ll find you have the time and energy to tackle other challenges in your life.

 


Sources:

(1) Williams, Goeff.  “7 Steps to Defeat Money Depression.”  US News.  6 Aug 2014.
Harding, Anne.  “When Money Ruins Your Mood.”  Health.com.  http://www.health.com/health/gallery/0,,20541338,00.html

(2) Crown, WH, et. al.  “The impact of treatment-resistant depression on healthcare utilization and costs. The Journal of Clinical Psychiatry

(3) Gabler, Neal.  “My Secret Shame.”  The Atlantic Monthly [may 22016: 52-63]

(4) The World Health Organization gives the health life expectancy for US citizens as 69 years, as compared to a current life expectancy of 78 years.

(5) http://www.cancer.gov/about-cancer/causes-prevention/risk/substances
http://www.cancer.org/cancer/cancercauses/

 

 

 

Boomers: Living Longer but with Poorer Health

In the past, living longer was associated with having better health in one’s older years.  A new study by researchers at the University of Southern California indicates that this relationship is no longer true.

The study analyzed the increase in life expectancy among Americans between 1970 and 2010.  In turns out that most of the increase in life expectancy is in the time that an individual suffers from a major illness or disability.

That finding links the increase in life expectancy with a dramatic increase in healthcare costs.  However, there have been no changes in government funding of Medicare or Social Security Disability to match the change in need.

Source:  http://ajph.aphapublications.org/doi/10.2105/AJPH.2016.303120

 

 

Retirement: the Fading Dream

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Most Americans today will never be able to afford to retire.  Period.  Retirement was a concept basically created in the 1950s, and a number of factors have come together to end the dream for the great majority of Americans.  The end of the dream in turn necessitates changes in how Americans live.  These changes will affect the economy and politics.  Arguably, they already are.

Here are some of the fundamentals:

  1. The average US household has $35,000 in funds at age 65.
  2. The average Social Security payment in 2016 is $1,341 per month.
    https://faq.ssa.gov/link/portal/34011/34019/Article/3736/What-is-the-average-monthly-benefit-for-a-retired-worker
  3. According to Fidelity Investments, the average couple will encounter $245,000 in out-of-pocket health care expenses after age 65.
    https://www.fidelity.com/about-fidelity/employer-services/health-care-costs-for-couples-retirement-rise
  4. The Fidelity estimate excludes long term care/nursing home costs.  According to Morningstar, we need to add 2.4 years of nursing home or long term care costs, at approximately $13,000 per month per person, to the Fidelity total.  Subtracting what Medicare covers of nursing home expenses, that’s roughly $347,000 per person.

Basically, the average person needs upwards of $800,000 in liquid assets to retire.  However, at age 65, the average American has $35,000 in savings.

It’s pretty easy to see that these numbers don’t work for most people.  And that doesn’t consider the 10% of seniors who are caring for a grandchild.

So, how can the average person cope?  

  • They can work.  However, that takes jobs away from younger workers.  Job creation in the US isn’t strong enough to support both an influx of new high school and college grads and oldsters returning to work.  However, in this competition, older workers are handicapped as large corporations don’t like to hire them.  Seniors will return to the labor market at a much lower rate of pay than they had previously.
  • They can die at an earlier age.  In the US, low income males are doing that today, having lost 4 years of life expectancy since 2000.
  • They can deplete assets and let state aid contribute to covering expenses.  However, that means living one’s last years in extreme poverty.  People with severe, terminal illnesses such as advanced cancer are often having to do this.
  • They can move in with children.  The incidence of multi-generational families is on the rise.  That will change the kind of home buyers will want.
  • They can move outside the US to where health care is much less costly.  Central America is the destination of choice for emigres.  The US government doesn’t publish statistics on citizens who live outside the country.  Current third party estimates range from 3 million to 9 million, excluding military and diplomatic personnel and their families.  All estimates agree that the number is increasing.

[NOTE TO POLITICIANS:  More Mexicans are now leaving the US than entering, counting both those with and without documentation.  Why is this a point of discussion this year?]

Several of these trends suggest that there may be another sell-off of single family homes in the future, with another round of declining home prices, underwater mortgages and foreclosures.  Boomers will need money for health expenses.

The growing volume of available senior labor may put a cap on wage increases, and increase deflationary pressure.

The fundamental problem is that today’s Americans reached adulthood with certain expectations about how their life would be.  Those expectations are being dashed, generating the anger that is playing out in the current election season.  The disappointment and anger is still in its early stages, and may get much worse.

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In this context, its rather amazing that so many people wanted to run for the Presidency this year.  The next four years are likely to be traumatic, and the next chief executive is likely to leave office after one term as a much hated individual.

Skateboards and Emergency Rooms

YouTube is populated with skateboard bloopers, and with good reason.  According to researchers from the Center for Injury Research and Policy at Nationwide Children’s Hospital, skateboards put 176 users into emergency rooms in the US every day.

(OK, before we get into the “guns don’t kill people argument,” it’s mishaps, bad luck or bad judgment by users that cause ER visits.  No, skateboards don’t hurt people.  People using skateboards hurt themselves and maybe others as well.  However, even the best riders get hurt, and most users aren’t that good.)

The study was based on analysis of data from 1990 to 2008.  And yes, skateboard users can minimize injuries by wearing helmets and knee and elbow pads to an extent.  However, if you’re trying to jump between the roofs of two three-story buildings, there’s only so much that protection can do.  Most users don’t even wear the minimum.

Source:  Science Daily:  9 April 2016