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Tuesday, March 24. 2009
For some today, and for just about everybody in the past, medical insurance was something everybody bought, just like life insurance or disability insurance, to cover extraordinary expenses. It is called Major Medical, and it is still readily available.
Over the past 20-30 years, governments, businesses, and union contracts began expanding their coverage by reducing deductibles and covering more routine things. Medicare, of course, was the model for that. During the same time, costly medical technology and new drugs were developed in a near-miraculous way, mostly in the US.
With those changes, folks began wanting "insurance" to cover their routine maintenance medical expenses instead of the things that would financially overwhelm them. When that shift was combined with the CYA style of medicine which results in $5000 work-ups for dizzy spells (fed by the ambulance-chasers), everybody expected everything.
That isn't sustainable, and will never happen. Medical technology has grown to an amazing extent, but those machines are expensive.
I have no idea what the folks in power are trying to plan for us, but I know it will be an entitlement disaster, filled with unintended consequences, that people would not be happy with. It will end up with politically-determined rationing.
Our family bought Major Medical insurance many years ago. It cannot be cancelled. It's more important than a cool car. Why everybody does not do that when they are young and healthy is beyond me, because it would seem like the logical and prudent thing to do. Over the years, we have increased the deductible so that it is quite affordable, and we keep a money market savings account specifically for medical bills to the amount of the deductible. As I recall, we began with a $2000 annual deductible, and now we finally have a dirt-cheap $20,000 2-year deductible on the original policy. It does not cover any routine or preventive medical care, which is as I think it should be. Nobody owes me medical care, in my view, any more than anybody owes me auto insurance.
We have kept this policy whether or not I or my husband had some form of insurance through work, because you never know how long you will want to keep a position - or when you will be let go.
Off-topic: Around 30% of Medicare expenditures occur in the last year of life. In other words, on failing and terminal people. Interestingly and unsurprisingly, when docs hold end-of-life conversations with these patients (as we should), the costs go way down.
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I have heard that, for many people, up to 75% of healthcare costs occur in the last year of life. I know this was true or nearly so for my parents, but that was partly because it took a lot to get either of them into an examinatin room. It seems reasonable for families to choose to use resources to save a parent's life if there's a decent chance, as happened in Dad's last illness. It seems just as reasonable to use resources to relieve pain and other problems in a final illness, as happened with Mom. They were both on Medicare, into which they had paid for most of Dad's working life.
The health insurance scam is based partly on a fantasy that you'll get very very very sick but won't die, resulting in catastropic costs that will wipe out everybody.
That's unlikely to happen. If it does, just decide for yourself now, you'll take the option of dying.
There, that worry's gone.
Now you can reason about health care.
Good for you, Dr. Joy! In an earlier post, I suggested just this strategy for expanding healthcare coverage for all ("most," as soome people will always fall between the cracks); a major medical policy coupled with a medical savings account that is allowed to accumulate for unforeseen needs, of which there are many in old age. The key is for the coverage to be consumer paid-for, consumer deductible and consumer selected. Therefore, it travels with the user and not the job. Insurers sell their policies through professional/vocational/union/educational/alumni organizations, AARP, or state pools. The unemployed. etc. can be covered much as food stamps and other services are now provided.
Why would we need gatekeepers if the consumer is in control of his own care?
Today, Blue Cross/Blue Shield announced it is willing to cover those with predetermined illnesses. As the government puts more pressure on private companies, I'm sure other concessions will be made.
The government CAN help by:
1) Coordinating a uniform method of reporting services on ONE form, not the hundreds that providers now face when seeking approval or reimbursement for services. DRGs (Diagnostic Related Groups), the government's original effort to standardize the tracking of costs and outcomes, have apparently morphed into many sub-categories that don't carry over from one state to another. This one step would lead to decreased administrative costs and increased TRANSPARENCY now lacking in our system.
2) POSTING the average (urban vs. rural, state/region/?) cost of care...from a 30-minute office visit to the most common surgeries. Who goes into buy a service and only knows what it's going to cost, even approximately, AFTER it's provided? The healthcare consumer (well, perhaps auto repair shops are equally opaque).
It will be interesting to see how the out-patient cliinics at Walgreens, CVS, etc. impact healthcare access. Competition is good for cutting through the fat in a system.
Insurance companies should encourage check-ups and pay for them. Too many people put off going to the doctor until 'something's wrong'. That 'something wrong' could be five years of cancer treatment or a disease, condition that could have been taken care of or prevented if caught early. Seems good sense to make the check-ups a part of any policy.
The problem works both ways - as usual. Humans are involved.
Dear Dr. Bliss,
I offer a cautionary tale. It is an anecdote.
My wife was diagnosed with cancer on April 1, 1993. She passed away on July 16, 1993. Lung, brain, spine, skin - who knew what else. It was apparent from the start that there was no hope. Total medical bills? Upward of $150,000. Why? She had a great insurance policy. In the last two weeks of her life she had two emergency operations that totaled approximately $60,000.
The doctors, Gods if you will, were slaving night and day to bring succor to the afflicted. There was a surfeit of Mercedes Benz automobiles in the reserved parking area.
Really great post. Please keep them coming.
As someone in the military, healthcare costs have always been a bit of a non issue to me. My wife and kids do go out in town though (more options) and so we have to cover some costs.
I did however look into health insurance a few years back when my brother was having a hard time getting coverage. OK, it's not cheap. But it is certainly not impossible. When I really looked at it, it just seemed to be that one would have to sacrifice in other areas of life to afford it. Hmm...how about giving up the cell phone, cable tv and the big screen tv? Just some thoughts. I find it funny how some people have no problem dropping huge sums of money on fancy items, but healthcare is "too expensive." It is this sort of person that the Administration feeds on.
I do like the Major Medical policy idea though. Makes sense.
"Insurance companies should encourage check-ups and pay for them"
From a financial standpoint, they should do this only if the total cost of the checkups plus treatment is less than the total cost of the treating the otherwise undiscovered conditions without checkups. (I think I said that right -- I haven't had my coffee yet.)
You can't factor in the value of the lives lost to late treatment because the insurance company isn't paying for those. The insurance company is a business. If you want to make it socially responsible, then you end up with issues like it deciding that perhaps it's not worth it to continue to treat Mr Smith's cancer because let's face it, Mr Smith is old. Or a jerk. Or a junkie. And what worth is he to society anyhow?
But no worries -- we're not going down THAT road.
I couldn't agree more. I've had a huge deductible policy for almost 3 years now and it's surprisingly affordable. The folks that say you cannot afford insurance without a job have never put much thought to it. I don't need coverage for taking scraped knees to the ER -- and the fact that I don't have it makes me think twice before dragging myself in.
As for the implications that a parking lot full of Mercedes indicates something nefarious -- I can add further anecdotal evidence. I grew up in a doctor's family. There is no question that doctors slave night and day. My father routinely put in 80+ hour weeks for 30+ years. He generally was not around for holidays and birthdays. And yes, he was compensated for it. Oh, and he drives a piece of junk 1988 GM truck.
We've been insuring ourselves privately (not through employers) for 10 years now. It's quite affordable if you choose a large deductible and set aside savings for the deductible. As several posters have pointed out, you budget for it by giving it a higher priority than things like cellphones and TVs. Without even trying hard, I can come up with a list of 100 things the typical uninsured person finds money for before budgeting for insurance.
I'm interest in the Major Medical thing, though, if it can be maintained even when you have coverage through another source, such as a job. One of the things I've always found most frustrating was the requirement to keep only one policy at a time. We use Blue Cross, but were considering switching to an HSA policy with another provider a few years ago. From what I could understand of the impenetrable nonsense I heard from all sides, if I tried to keep my old coverage while waiting for my new coverage's pre-existing-condition period to expire, even though I was willing to pay double premiums for a while, I'd void one or both policies. We need portable insurance in this country and less dependence on employers -- and MUCH less dependence on government insurance programs.
As a followup, since I got right on the phone to talk to an insurance agent, I'm told that what I already have is called "Major Medical," and that they give that name to basically anything that isn't a "supplemental policy." My Major Medical is still something that would expose me to fraud charges if I tried to keep it while accepting a new job that enrolled me in a group policy. Is it possible that the coverage you and your family are entitled to keep over the years despite job coverage is a "supplemental policy"? I'd really love more information about this. Owning a very secure long-term catastrophic health insurance policy that we cannot be screwed out of is very important to me. If at all possible, I never want to touch any aspect of MediCare, either.