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You are planning to get another tattoo, it costs $200.
You are going to take your best friend out for fine dining, it will cost $175.
You promised your children to take them to a local theme park, $200.
You receive a bill from your doctor because you hadn’t met your deductible, $200.
Which expense is unaffordable?
Okay, a bit of a trick question, but there is no doubt the answer is nearly always the medical expense is unaffordable. That’s because we have been conditioned (since around 1943 when health insurance took off) to believe medical bills should be paid by insurance – actually meaning anyone but ourselves.
Years ago I had an encounter with an employee’s wife who was incensed that our health plan would not cover Lyme disease vaccinations for her teenagers. She claimed her children were at risk and could die without the vaccine. I said she could always pay herself – $60 at the time.
Boy, was that a mistake! She screamed, “You expect me to pay with my own money?” Remember, “could die”
This story may be anecdotal, but from years of experience, not an unusual attitude. How many times have you heard someone complain about paying a deductible – even before they were in the thousands? Have you ever heard complaining about a $35 prescription co-pay? How about a $35 dozen of golf balls?
Think about this. The law says all forms of contraception must be free. Generally not expensive, often a voluntary purchase, but our mindset says it is unaffordable under all conditions – so they are “free.” Of course we know they are not free, the cost is buried in everyone’s premiums and taxes.
I was in the supermarket recently near the pharmacy. I women was arguing because a script was not covered by her plan. The pharmacist told her the cost with a discount card was $33.00. I’m not paying that, she said. Her shopping cart contained more than $33.00 worth of soda and junk food, including frozen White Castle hamburgers – which motivated me to buy some myself – I digress.
Don’t get me wrong, I am not exempt from these feelings. I don’t want to pay a penny out of pocket on health care either.
The idea we should not pay for our health goes beyond actual care. Consider this comment I was sent. “If I paid into Medicare for my whole career, why am I having to pay $175 a month for Medicare after retiring? Someone please explain this to me.”
How about the move nationally and among states to exclude medical debt on credit reports? In NJ. a new law greatly restricts the ability for creditors to collect medical debt, thus providing another incentive not to pay. If you owe $400, you owe $400, right? Apparently not.
Our collective attitude toward paying for health care is one of the drivers of high health care costs. We want someone else to pay and when they do we don’t care how much – well maybe when our premiums increase, but most people don’t even make that connection.
There is always something to buy with our limited dollars that gives us pleasure, but not health care which most often is not pleasurable, but nevertheless a highly valuable purchase.
The bottom line? Most Americans would prefer to have all their health care costs buried in taxes and that way health care will be “free.” Maybe someday we will all realize that.
May I suggest that this resistance in the face of any medical costs is born of fear. That is, if I agree to pay for this medication, visit, procedure etc (that I thought was covered) that I can reasonably afford, then someone is going to come after me with a $10,000 charge that I cannot afford.
Medical Billing in the US is opaque and confusing. We get bills when we least expect them and those bills are confusing and unclear. So, many people respond by resisting any costs at all.
Even those of us who have some financial savvy get hit with bills and costs that make no sense. What is it like for someone who doesn’t have that financial savviness to respond when they receive confusing bills that are in error?
The people who cannot afford the really high hospital bills are not the ones you speak about. Also, regarding Medicare for $175, double that if you want to get gap insurance to pay the remaining 20%. My wife and I pay over $8,000 for part B coverage, even though we paid onto Medicare all our lives. This doesn’t count deductibles and co-pays either. The medical system in the US sucks. Be honest. Compared to other developed countries, we have failed. Many others have to forgo that coverage because it would eat up too much of their social security income. Many who cannot pay medical bills are not wasting money at a theme park, fine dining, tattoos and cases of soda. That’s a pretty skeptical, jaded and incorrect assumption.
You paid a Medicare tax all your life for Part A Medicare. Not until you turned 65 did you pay for Part B or D. What i said was is that people do not want to spend their money on health. And you illustrated my point.
it’s not the medical system, it’s the insurance system that is the major problem.
What a mess. My solution is to never use health care. I think I’d rather die young than have to navigate healthcare here or in any country.
Really? Going to set your own broken arm? Remove your own appendix? No vaccines, no antibiotics, no pain meds?
The non-system in this country is a mess, but I use it anyway. Other countries have actual, functional systems, funded with taxes.
It’s the payment system that are the problem. Connie and I have used Medicare for over 14 years – many times for many different things from minor to serious.
We have never had an issues getting or paying for care, never paid more that Part B deductible (with Medigap). The multiple insurance systems and related administration is the main issue.
My wife had an ultrasound which we paid for out of our deductible. Then six months later the radiology biller sent us another bill for more money. After countless phone calls where my wife was told it would be taken care of, they sent the bill to collections. Now she has to ignore the bill collector’s phone calls twice a week. With the sorry state of our medical billing that NJ law may be a good idea.
Was it a non participating provided entitled to bill above the amount that was applied toward your deductible?
No, the provider was in network.
I would contact the provider directly as from what you say the balance billing is not legit. It may be a screwed up billing staff.
I had surgery a couple of years ago and a surgeon billed Medicare $5,000 as an assistant. Medicare denied it as ineligible and it was. I was waiting for a fight, but never received a bill. Sometimes they take a chance you will pay anyway. Nothing new it’s been going on for decades.
I was a pretty militant local union rep, well known and well-liked by the international union. I did however find myself on the other side of the HSA debate; I liked them. I believed that the higher deductible of the HSA’s was a fair trade-off for lower employee share of the premium and the opportunity to build tax free income.
To be fair the international had legitimate concerns: A fear that members would skip necessary medical care, they would resist contributing to the HSA, and of course that they would bitch incessantly about not getting care for free.
I rode the HSA train all the way to Medicare eligibility and I’m glad I did. Ended up with a healthy 5 figure account to carry into my senior years.
Dan, we did the same thing with accumulating a 5 figure HSA fund. When my company started offering HDHPs with an HSA it wasn’t that hard to do the analysis to see it was the best deal. It clearly depends on the detailed costs, but in our case the lower premiums made up for the higher deductible. If you were lucky and did not need to use any HSA funds, you could accumulate for the future. I think this makes a lot of sense for younger workers who are healthy. Even if you have to dip into the HSA for current medical costs, the tax savings usually makes it a better deal.
Who are healthy is the key – and not subject to any emergency. The employer sets the prices to save money in any case. It boils down to being able to take the risk and afford to save in the HSA. The lower the persons income the greater the risk.
Like Dan below, even if we had hit the out-of-pocket maximum every year, we still would have been no worse off than if we had elected the expensive traditional plan. Even if we weren’t “healthy”, it was still a better deal. In a good year, a couple could sock away $5000 in the HSA that they wouldn’t have otherwise had. In a bad year, the HDHP premium cost + out of pocket maximum would be about the same as the traditional plan’s costs. Maybe your company’s options were different, but most people I know could easily build a 5 figure surplus by electing HDHP/HSA.
What happens to the person who takes the HDHP and invests in the HSA the equivalent of the saved premium difference, but gets hit with large family bills before there is any accumulation in the HSA?
And keep in mind out of pocket costs may go beyond the deductible. An HSA may work fine for some people, but not always and mostly not for modest income people.
Interesting question. I’ve always said you have to look at the details (premiums, deductible, co-pays, OOP max) to understand your best choice. Too many employees relied on anecdotes, gut-feels, guesses, and fear in choosing their medical plans. I tried to put some rationale behind the choice. My employer clearly made the HDHP with HSA an attractive choice; The main difference in our plans was the higher the premium, the lower the deductible. Co-pays and max OOP were the same. I’m sure other company’s plans may have different structures, and the choice could be different.
In the unfortunate situation you reference above, the person would have to do what you do with any bill you can’t pay – work with the provider, use emergency funds, charge it, borrow from family,…. With an HSA you can reimburse yourself in the future.
It is interesting to note that if I were still working at the same employer I would not have an HDHP with an HSA. The competition for employees with certain skill, experience, and accreditations has gotten so tight, especially in the DC area, that the company now provides “free” premium health care – $0 premiums.
The plan I had included a family out-of-pocket maximum (not deductible) that was roughly the same as the required yearly premium for the traditional plan. People (modest income or not) paying the higher premium are out all that money regardless of whether they need services. You could probably contrive a low-probability scenario in which someone would be better off for a year or two with the traditional plan under such parameters. But over time, the math favors HDHP/HSA, at least with the options I was presented with.
Look at it this way. Employers offer or require HDHPs to save money. If that is true, then the costs saved go to others- overall to employees. In the aggregate both the employer and employees cannot come out ahead.
Especially when the employer contributes to the HSA, which all three of my and my wife’s employers did.
Fact is the international was right. We forget that many (most) workers can’t use an HSA to any extent while also trying to save for retirement.
In addition, if the goal was to allow the HSA to accumulate, they had to come up with any out of pocket health care costs along the way.
One of my sons has an HSA and high deductible plan, but has dipped into the HSA to pay for the care.
Nothing wrong with using HSA funds to pay for current care. Any funds that accumulate for the future are a bonus. The point is what is the best total cost for the employee assuming the care is the same.
In my experience, the premium for the high deductible plan was so much lower than the traditional options that it was almost impossible to not come out ahead.
OMG Ken, at age 64 my premium was still under $300/month, with a 5k deductible. The premium for a traditional plan was near $800. I figured the worst case was pretty much a wash. My good health saved me a ton of money.
I saw their side as well. My lifestyle and good heath worked to my advantage.
Richard: I always enjoy reading your articles and today’s was great. My first health insurance policy had a $0 deductible and both my children were born under that policy. Fast forward through years teaching into administrative positions, ultimately as director of finance and human resources, and I completely understand what you wrote about people always wanting healthcare costs to be paid by others. That is simply not the case! I am now retired and fortunate to be eligible for a plan F medicare supplement policy. Just had rotator cuff surgery and am anxious to see how much (or how little) my responsibility will be. Keep your excellent articles coming!
If you have F you should have $0 cost.
Yes, that is what I am expecting. Didn’t explain that very well.
“Most Americans would prefer to have all their health care costs buried in taxes and that way health care will be “free.””
That is what all other “developed” countries do, and their citizens are very happy with the results. Not only is medical care free or nearly free at point of service, the overall outcomes are much better than in the US, even though medical costs are much lower.
See: https://www.healthsystemtracker.org/chart-collection/quality-u-s-healthcare-system-compare-countries/
And: https://www.commonwealthfund.org/publications/issue-briefs/2023/jan/us-health-care-global-perspective-2022
You’re right. I have “interviewed” scores of people in other countries and they all say they like their universal system.
However, our friend in the UK has been waiting many months for a hip replacement and now she has been told she has to lose weight first. Not sure that’s good or bad, but cost effective.
As far as outcomes go, there is more to it than just the coverage system, like lifestyles and the fact the US is the most obese country in the world – except a few islands and one in the Middle East
That doesn’t explain things like the maternal and infant mortality rates.
The UK situation is due to the Conservative government starving the NHS of funds and Brexit starving it of workers.
The first issue is a societal problem too.
You are right about the funds and Brexit. That was a big mistake based on misleading the voters. Hmmmmm
Part of the problem with maternal and infant outcomes is down to inadequate pre and post natal care. Some may also be the result of the excessive number of Caesarean births in this country, in turn likely due to the fact that doctors can charge more.
I worked for years as a maternal/child public health nurse and couldn’t agree with you more, Kathy. I haven’t kept close track of trends since retiring, but it seems like the situation here in the US is only getting worse: higher rates of C-sections, poorer outcomes for all but especially for low socioeconomic families. Sad state of affairs.
But what is the root cause? Is it the health care system? Is the care provided lower quality or is it how we use or don’t use the system? I don’t know.