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I’m pretty sure we can agree when using the word “affordable” there are as many definitions as the number of people involved.
I observe the debate in Congress over the premium subsidies under the Affordable Care Act and wonder, what they are thinking.
Regardless of your views on that, we tend to forget we are all subsidized for our healthcare. It may be through the ACA, more often our employer, perhaps Medicaid and for many of us Medicare. Keep in mind the standard Medicare premium for Part B covers only 25% of the cost, the rest comes from general funds via taxpayers.
The problem with healthcare is that the reality is no amount being spent is affordable. You would be hard pressed to find someone who thinks their premiums and/or out of pocket costs are affordable no matter the source of insurance.
Sometimes trying to save money we trade lower premiums for potentially higher out of pocket costs which is fine until those costs are incurred. On the other hand, we may buy the best and most expensive coverage trying to protect ourselves, but that means we traded guaranteed monthly spending on higher premiums to avoid the potential out-of-pocket costs.
Sometimes our friends around the world may boast about their free healthcare and indeed when they receive care there may not be any out of pocket cost, but we all know it’s hardly “free.”
Under current law if the full premium for the benchmark Silver plan on a ACA exchange exceeds 8.5% of your income, you qualify for a subsidy to bring your net premium down to no more than 8.5% (or less, on a sliding scale for lower incomes). Who knows what may happen to that, but the question is, is 8.5% of income the affordable benchmark?
Since most employer plans are not income based, families often pay 10% or more of their pay in premiums with out-of-pocket costs adding even costs more, especially with high deductible plans.
The day before I retired our monthly premium for employer coverage, including Rx was $197, with a $1750 out of pocket limit per person. Today our total premiums are more than ten times that amount, but our out of pocket costs are limited to a deductible – $288 each (2026) except for prescriptions. The $197 was clearly affordable. We pay over $2,000 without financial stress, but it does not feel affordable. Ignore the IRMAA portion of premiums and I bet the basic premiums are not seen as affordable for many retirees, especially given they are not income based.
A friend told me he chose Medigap Plan L over Plan G because of lower premiums. Plan L has significantly higher out of pocket costs, but the premium is between $40 and $60 less than G with variations by location. Is that a good affordable deal? Maybe and maybe not. The 2025 out of pocket limit is $3660, (equivalent to $305 per month) but no coverage for excess charges by a physician. So, to save maybe $60 per month, the risk is incurring out of pocket costs equal to $305 per month, which over age 65 is, unfortunately, an easy cost to incur- trust me.
When it comes to healthcare what is affordable to most people is $0.
Hiding our out of pocket health care costs in a lifetime of taxes paid to achieve universal coverage and maybe “affordable” healthcare when we need to use it, doesn’t seem all that bad when you are faced with a large bill or very high premiums.
That’s such an insightful discussion about managing healthcare costs. I think balancing insurance coverage with preventive care is key — investing in wellness can reduce long-term expenses. It’s also smart to review plans yearly since needs and policies change. How do you personally decide the right balance between premiums and out-of-pocket costs? non-surgical
The major thing is to decide honestly with yourself how much you can and will willing spend out of pocket in a year if necessary.
So, can you handle a high deductible in return for a lower monthly premium? Would you set aside or maybe fund an health savings account with the premiums saved.
How does the premium you may save compare with your maximum OOP risk? Is it mathematically possible to come out ahead by taking a higher premium? Sometimes it’s not.
As I said, you are sure you will pay the premiums, but not sure you will incur health care costs or how much. It’s like a slot machine. 100% certain the money is going in, highly problematic if any is coming back out. So, do you pass by the slot and keep money in your pocket?
Do you have a chronic condition where your out of pocket costs may be predictable? Based on age or other factors do you have health risks likely to incur costs? A bit of a gamble all around though.
Of course, I’m pretty sure we all want to pay a premium and never collect a penny in claims. I know I would like that.
Both of us are still employed so I’m not as emotionally vested in this issue, but I was surprised by Torsten Slok’s “Daily Spark” today about the cost of employer / employee insurance: “That is a total annual cost for health insurance per family of $26,993″ https://www.apolloacademy.com/the-daily-spark/
When they passed and signed the ACA, Obama and Pelosi told us that premiums will go down.
I think they said people would save $2000 or something like that. Anyone familiar with the health care/insurance system in even a basic way should have know the reality, but those people are few.
You can’t create adverse selection, mandate added benefits or eliminate underwriting and save money. You can expand those with coverage and make their costs more affordable, but only by spending money elsewhere-taxpayer subsidies of some type.
The total premium increases we are hearing about are not the result of ACA they affect all plans including employer self-insured plans where 60% of workers get their coverage.
OK, but is it right that they purposely lied to the American public?
I would be interested to see the evidence that they “purposely lied” to mislead the public.
I would also be curious to know whether you are similarly offended by the false claims from the current president that the current ACA debate is over free healthcare for illegal immigrants, that he has his own premium-reducing health plan to replace the ACA (no plan has been produced), that he would protect coverage for people with pre-existing conditions (his administration instead asked a federal court to strip that protection), and that he would not cut Medicaid benefits.
Come on folks. Let’s have an estimate. What percentage of your gross income do you think is affordable/fair to spend on healthcare- premiums and out of pocket costs, but mostly premiums.
If your income is $50,000 would you be comfortable spending $4,000? Or if you earn $100,000 how about $8000 or $666 per month?
Not easy to commit to is it? Not even something we like to think about because we really think about so many better uses for that money.
Why the 🔻?
Our basic problem is high prices. Each medical procedure in the US costs three times as much as the same procedure in countries like Germany or Japan. Until we cut the actual costs, playing around with various schemes of payment will not get us anywhere.
Okay. My sister lived in Germany for many years while she worked for the DoDEA (US military dependent school system). Around 2015 she had a kidney issue and was admitted to a German hospital. The care was cheap and she got well.
The room to which she was admitted was a 4 bed ward which she shared with 3 men. The hospital was not even close to the medical cathedrals we build in the USA.
Now transfer those standards to the US and see how it goes. I have interviewed dozens of people across Europe and asked them if they liked their health care system. Not one had any serious complaint. That’s what they grew up with.
The same in the US, we grew up with a system that has taught us to expect the most, the “best”, the most convenient even though that may not be the reality. Plus a pretty widespread aversion to government involvement except when we reach age 65.
We are a very conflicted society.
That plus reassess our use of many services. It’s not just the price per unit, but the units used. If you have the convenience of many scanning devices for example, they must be used to be paid for.
What is interesting is we want lower prices for healthcare services, but I never heard the same demand for other goods and services. Of course, other prices face competition, but that is not possible with healthcare. Competition actually can drive up prices.
I may be missing the point, Dick. I don’t like paying my out of pocket costs for care and premiums, still, for us, they are affordable.
There was only one point in my life where they were becoming unaffordable, that was a couple years before Medicare eligibility, when my age and income collided, causing huge spikes in my self-employed insurance premiums.
Up to that point I had the maximum deductible allowed, and spread the risk by maxing my contributions to an HSA. I was one of the lucky ones who never got sick, still, the money was in the account if I would have needed it.
I rectified the situation by convincing Chrissy to marry me, making me eligible for her employer’s group policy.
Now, at age 73 and 70, our supplement premiums and part B premiums have crept up. We don’t enjoy paying them, however, I can’t say (with a straight face) that I can’t afford them.
I don’t like it when people say this or that is “free”. My mom received an order of prescription drugs shortly after she died. When I told my sister I was going to send them back (package un-opened), she asked why I would do that, as they were “free”. Nothing is free, and the attitude that things are free, contributes to high healthcare costs.
The point is generally, you pay now or pay later which is the balance between premiums and out of pocket costs. Premiums are a fixed expense while out of pocket costs highly variable.
Given that aside from IRMAA which actually affects few retirees (7-8%) costs are unrelated to income so what is affordable to most people has a very different definition than what we might use. The same holds true for many younger workers faced with a HDHP, premiums and the need to fund a HSA to account for the high deductible.
Something can be labeled affordable all we want, but we don’t even know what that means. What is a reasonable portion of income is affordable for all health care spending? I don’t I don’t know, but I’m pretty sure it is variable based on income.
I can put my income into a mortgage app and it supposedly tells me how much house I can afford. No such thing exists for healthcare that I am aware of.
As I said, the mindset is insurance premiums are too high and insurance should cover all my healthcare expenses, even things like birth control and routine preventative care.
That means it does not meet the definition of insurance at all. Hence, premiums must equal our desire for paying $0 for any and all our healthcare. So, we complain about the premiums and we complain about what “insurance” does not pay.
> I can put my income into a mortgage app and it supposedly tells me how much house I can afford. No such thing exists for healthcare that I am aware of.
What would it take to build such an app? Is it even possible in the US?
No idea, but first we need a formula to determine the definition affordable, but like I said there is no such thing as that definition we can agree on because we really think it is zero.
”I observe the debate in Congress over the premium subsidies under the Affordable Care Act and wonder, what they are thinking.”
Dick, Your vision must be incredible, or I’m blind.
I can’t see any debate occurring in congress, just a bunch of children calling each other names.
I was trying to be polite.I could write a dozen posts on that topic which I reserve for my blog.
Polite is good, Dick.