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

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

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.


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