Affordable? Healthcare? How do you spread your risk?

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.