Health Care: There Has Got to Be a Better Way

Rodney JohnsonIt’s the end of October, which means Halloween is fast approaching. Then, once the calendar flips to November, we jump headlong into the holiday season.

It’s a time of celebration, travel, and gift-giving, but, in recent years, something else was added to the mix, and it fills people with dread.

It’s not more visits from in-laws (although, luckily, mine are fabulous!). It’s open enrollment for health insurance.

Since the Affordable Care Act went into effect, millions of Americans have been driven into a health insurance market that operates on one schedule – open enrollment beginning November 1, to establish coverage for the following year.

While the kinks of the sign-up and renewal process are gone, that doesn’t mean that all the problems are solved. The biggest issue, cost, is still there, haunting people as they wait nervously for the enrollment window to open. When it does, they’ll get their first glimpse of how painful next year will be.

I personally use this system, and my current provider sent me a fabulous letter outlining my options for next year.

The jovial note started with: “Good News!”

It went on to let me know that I could keep my current coverage by doing absolutely nothing. To stay enrolled for 2016, all I had to do was sit on my hands and let it happen. The insurance company would automatically carry me over to the new year, with all the benefits and good times associated with my current level of health insurance.

It wasn’t until page five or six that they got to the heart of the matter.

Yes, they said: I would have to pay a tad more to stay in the club.

For my family, the premium will jump from $1,456 per month to $2,008. That’s a 37.9% increase in one year. This isn’t a platinum plan, or even a gold plan; it’s a middle-of-the-road silver plan. It is a PPO instead of an HMO, but that’s because I’d actually like to see my current doctor.

The 37.9% increase for next year is on top of the more than 30% increase I was hit with last year. I’m having trouble reconciling all the crowing about affordability and bending the cost curve that I hear out of Washington with what’s flowing out of my checkbook.

Since individual conditions aren’t taken into account, our own health doesn’t matter. But for the record, our health expenditures in 2015 are less than half of what we paid in premiums.

What makes the increase particularly galling is how the insurance company presents it. “Good News!” they say, then go on to talk about how wonderful health care is and how much they care.

When you call – and believe me, I’ve called – and ask how the premium can increase by more than 30% two years in a row, the phone rep sounds tired, exasperated, and basically put out.

“It’s a number of factors regarding the cost of providing care to a large group of people in your area.” I’ve asked many times to speak to whomever sets the rates. This always leads to silence.

There’s got to be a person, or even a few people, who decide rates. Computers don’t do this on their own. Someone determines inputs and acceptable outcomes. I want to talk to them. I want someone to look me in the eye and say that it makes sense that I pay $24,096 per year not for health care, but for insurance.

What happens next year? If my premium jumps again, and there’s every reason to believe it will, my annual premium will be almost $30,000. This puts me in the “Cadillac Plan” category, where companies that offer such high-value policies to employees must pay a 40% tax on the cost over $27,500.

Who will the government tax? My insurance company? Me?

I realize the tax isn’t applicable in the individual market. The point is that the threshold of $27,500 was set as a benchmark for exorbitant plans that are overly generous, and yet my middle-of-the-road plan is getting there fast.

There has to be a better way.

There are exceptions to the Affordable Care Act. There are medical cost sharing programs that fall under religious exemptions. They require members to adhere to certain lifestyles and are much less expensive. And they aren’t technically insurance; they’re sharing programs among members. New ones can’t crop up because the law required them to be in existence before January 2000.

These programs remind me of the old mutual benefit societies that were often ethnic associations (Italian, Scottish, etc.). Members contributed to a general fund and then submitted their needs, which were voted on.

It’s possible that something of the sort will resurface. Families will buy the cheapest policy they can to satisfy the law and provide a backstop against a catastrophe, but then also join a group that will collect monthly payments and pay out for routine health care costs.

Of course, doing such a thing would fly in the face of how the Affordable Care Act is structured. There’s a reason my premiums are skyrocketing. The government needs the money to pay for others. If I find a way to bow out of the program, even partially, then I’ll hinder the operation.

I don’t want others to be without care. I’m good with contributing to the cause. But I want it to be reasonable and upfront. Don’t tell me that my health care insurance requires an annual cost of roughly half the median family income in the nation. Tell me how much is for me, and how much is a tax for the system, and then bill it that way.

In the meantime, I’ll be looking for an association that can lower my costs, or a group that’s exempt. I hear the Amish are a welcoming people.

Rodney Johnson

Rodney

Follow me on Twitter @RJHSDent

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Categories: Health Care

About Author

Rodney Johnson works closely with Harry Dent to study how people spend their money as they go through predictable stages of life, how that spending drives our economy and how you can use this information to invest successfully in any market. Rodney began his career in financial services on Wall Street in the 1980s with Thomson McKinnon and then Prudential Securities. He started working on projects with Harry in the mid-1990s. He’s a regular guest on several radio programs such as America’s Wealth Management, Savvy Investor Radio, and has been featured on CNBC, Fox News and Fox Business’s “America’s Nightly Scorecard, where he discusses economic trends ranging from the price of oil to the direction of the U.S. economy. He holds degrees from Georgetown University and Southern Methodist University.