Recently the Medicare Trustees issued their annual report and – Happy Day! – it looks like the Medicare Trust Fund will not completely exhaust its assets until 2026, which is two years later than last year’s estimate.
I, for one, am sleeping better with this knowledge. I can stop worrying about the fact that Medicare is still going broke. I don’t have to concern myself with the remaining 80 million-plus Boomers barreling toward retirement and their Medicare eligibility.
Bankruptcy is 24 months later than last anticipated. Let’s break out the champagne!
The reason Medicare is on such a fabulous glide path is because healthcare costs are rising at a much slower rate than anticipated.
I have to think about that one for a minute.
This particular statement seems at odds with everything I see around me… and everything I hear from other people.
But maybe there is a reason.
Perhaps it has to do with what is seen as healthcare costs…
For the Medicare Trustees, it’s represented by the cost of providing services. For me and the people I know, it is the cost of health insurance. When it comes to the latter, there is no containment. It’s a moonshot of expenses.
Given our set up as a small business, I have an individual insurance policy. I carry my family of five on the policy and we have no chronic illnesses or pre-existing conditions. We have no on-going prescriptions. Our health issues tend to center around sports-related injuries, not illnesses. We don’t smoke, don’t drink to excess, and are well within our BMI (body mass index) numbers. In short, we are healthy.
Yet our insurance costs are climbing at double digit rates… and have for as long as I can remember.
We have consistently moved to policies that have fewer benefits and higher deductibles, to the point that we now use a Health Savings Account with a five-digit deductible. Even with such a low chance of us actually using any insurance funds to pay for care, our premium was $657/month.
I just received my premium notice for the next 12 months…
Our cost is going up by 13.8%, to $748/month.
This is with NO change in benefits and NO claims on which the company had to pay anything. And, this is before the Affordable Care Act.
But don’t worry!
My insurance carrier, AETNA, sent a letter to let me know about the increase. It started the letter with large print stating, “Rates are going up – but we can help”. The letter went on to tell me that indeed, my rates are going up, but that AETNA is looking for ways to keep costs down.
Unfortunately, when it came to “helping” me, the letter was uninformative. Under the heading “We’re happy to help,” the letter directed me to call my insurance broker, to log in to the AETNA website to learn about my plan, or to call. None of these seemed helpful, so I called to see what the representative would say.
When I asked about my plan going up by 13.8%, when I had claimed nothing, he told me that my cost had nothing to do with me.
That statement is both stunningly informative and unhelpful at the same time.
If cost has nothing to do with me, then how can I work to contain cost? Of course, I can’t, which is the infuriating part.
I asked him if I should simply cancel insurance once the Affordable Care Act goes into effect, pay my $300 penalty per person per year, and then apply for insurance if I happen to get sick.
He told me that he had heard the strategy before. And he wouldn’t recommend it.
I have no brilliant observation to give you today… but, as you and I both know, healthcare is a major cost that is not declining. It’s increasing. And it’s rising the fastest on small businesses and those who do not qualify for subsidized care (up to four times the poverty level, or about $80,000 per year in income).
So, once again, the exact people who are being asked to start businesses, hire more people, and spend more money are also being told they must provide more support for the economy as a whole.
Somehow these things don’t compute…
But then again, I’m not a government bureaucrat. I’m sure that if I moved inside the beltway of Washington, DC, I’d immediately see how such a combination of things was best for me.
Ahead of the Curve with Adam O’Dell
When we wrote about the nauseating rise in healthcare costs earlier this month, I told you about one investment that should actually benefit from this dire situation: Omega Healthcare Investors (NYSE: OHI)… a real estate investment trust (REIT) that rents space to low-cost healthcare providers, like skilled nursing facilities.