FREE NEWSLETTER
Go to main Forum page »
When it comes to Social Security we hear:
Congress stole the trust fund and never paid it back
I paid taxes and thus paid for my own benefits
If we didn’t pay benefits to people not eligible, there would not be a problem.
Social Security is a scam, a Ponzi scheme.
Why doesn’t the trust earn interest?
Health insurance misinformation is even worse:
I feel like health insurance should be free, like it is in other places.
CEO pay and insurance company profits are driving premium increases.
Insurance companies deny my care just to make money.
Why should I pay for insurance when I’m healthy?
Nobody should question the care my doctor orders.
If my deductible is lower, why are premiums higher?
Why do I have to pay anything for my care when I have insurance?
I just wrote a blog post on the need for a universal risk pool, you might want to take a look. I’m guessing some of our over the pond friends can relate to all this.
Is it possible to educate people so they at least act prudently in their own interest and collectively support policies in everyones best financial interest. There are not many issues that affect nearly everyone as do SS and paying for healthcare.
Regarding retirement income and healthcare, it is interesting to view the US from an Australian viewpoint.
We have Medicare, a publicly-funded (i.e taxpayer funded) universal health insurance scheme. This has been running since the 1970s. Other than medical procedures that are deemed “elective”, any Australian can get medical care at no or low cost. Many Australians also choose to take private health insurance. This can assist with things like reduced wait times for non-critical care, choice of hospital and/or doctor etc. We also have the NDIS (National Disability Insurance Scheme) to support people with a disability.
I think in many ways we don’t appreciate how lucky we are to have Medicare and NDIS in place.
With regards retirement income, I’ve written before about our compulsory retirement savings scheme. This means that all working people are just saving for retirement (at 12% of their income) without thinking about it. If retirement savings fall short, there is a government funded aged pension “safety net”. Over time, there will be less reliance on the aged pension due to the compulsory saving scheme.
The outcome is that healthcare costs and retirement savings are not at the front of mind for most people.
I think the big thing to understand is that Australians are a very compliant lot. I can certainly see that the schemes described above are a good match for Australia, but would not necessarily translate smoothly to other nations.
You mention choice of hospital/doctor. Does that mean there is no choice in the public plan!
I thought the employer contributed 12% of pay to the retirement fund. Is that actually a deduction from the workers pay?
Thanks Dick.
With regards Medicare, the details are too complex for me to understand them all, but generally with the public system (Medicare), there will be far less choice than with private health insurance. With Medicare there may be choice in certain circumstances, but certainly not always.
With regards the 12% payment to superannuation (compulsory retirement savings), there doesn’t tend to be discussion about whether it is considered a deduction. A job might be advertised as “$100,000 + super”. So the employee gets $100,000 less income tax, and the employer pays $12,000 into the employees super. So the costs of employing people are effectively 12% more than what they are paid. This might sound like a big burden, but this percentage has been gradually ramped up over time and businesses have adjusted to this total cost of employment.
This is from a Morningstar article that Dave provided in your prior post regarding Vanguard and annuities. It illustrates what many of us frequently mention;
Education is a major obstacle for broader adoption, not just for plan sponsors and advisors, but for participants who are expected to use these products. Firms like BlackRock have invested in websites, calculators, and apps that project retirement income, but these tools only work if participants engage with them.
Unfortunately, neither your blog, or HD will reach any of the millions of the ignorant. And, no matter how many times you repeat the topic and info here nothing will change. I am sure that you are frustrated. In the early days of my career, I used to sit with my boss at the morning break over coffee and we could commiserate about why something we were working on wasn’t going the way we wanted. I’d say something like well, they didn’t read the memo about XX. He’d say, right. I’d say if they would just do what we suggest they would have better results. He would say, yup. I’d say, gosh why don’t they? He’d say, I don’t know, they should oughta wanna, but they don’t!
Sad but true.
Is it possible to educate people…..?
I’d say no. Many people just won’t commit to, and make education a priority in their lives.
Let’s not be too harsh on our fellow people – “the mass of men who live lives of quiet desperation”. How can they be expected to master the complexities of insurance and health plans when it takes two full-time jobs just to hover above the federal poverty line? Or to keep their minds keen and hearts steady through sleepless nights in the medical wards? There is something profoundly wrong with a system that heaps reward upon wealth yet lets the weary toil in the quiet neglect.
A tad dramatic. What in life does not require individual involvement and responsibility? Sure, things should be as simple as possible, but it will never be as simple as you expect. Quiet neglect? A bit of an overstatement- at least that’s what half of America would say.
Did you see the record sales for Black Friday and Cyber Monday? It wasn’t the wealthy doing that buying.
If anyone needs more education about Social Security and health insurance, it’s the policymakers, employers, and the CEOs of healthcare and insurance companies. These “smart people” collect taxes and premiums upfront—often at rising rates each year—while the promised future benefits remain uncertain and, at times, troubling.
Yes, there are always those who spend time and money unwisely, but that does not justify neglecting the true needs of the broader population: to be good stewards of limited resources to secure fair and sustainable health care and retirement. Telling struggling workers in my family or exhausted medical residents like my nieces and nephews that they simply need greater ‘involvement and responsibility’ feels unfairly harsh.
Quan, I didn’t mean to sound harsh, and I agree with your reply.
I had a few acquaintances in mind. These fellas are football fans. They can instantly recognize, and converse intelligently about plays and formations, and recall team and player statistics back to the beginning of recorded history. The depth of their knowledge is truly amazing. Just don’t ask them to balance a checkbook or prepare a simple tax return. These aren’t guys who have been dealt lousy cards, planning just isn’t their thing.
Unfortunately true is so many cases. Plus many people seem to be easily manipulated with false information that reinforces what they want to believe because it gives them an excuse of one kind of another.
It’s very sad how little the average person knows about finances. I believe it has to do with our education system and the fact parents do not discuss finances with their children. It’s all made even sadder because we have never had more info at our fingertips.
Exactly, more information and easy access to it if we just take a few minutes to look for it. I just can’t believe what totally illogical information people post online, others automatically believe and pass along. My concern is that misinformation is posted intentionally.
My favorite is CEO pay and insurance premiums. I did calculations for two major insurers and CEO pay divided by the number of policies came out to less than $1.00 per month.
That CEO pay is an interesting view probably from years ago. Not knowing what inputs you used, I did a comparison using current available data on United Health. CEO pay = $26.3M / 51 million members and the result is $0.52 per member.
In your example, what was the intent for that figure and how was it used? I don’t believe it is a standard metric used for CEO pay; at least I couldn’t find any source.
Plus CEO pay is about 60% non cash which has no impact on policy revenue. It’s effectively paid for by shareholders.
The intent was only to illustrate that CEO compensation has minimal impact on premiums.
In addition, even profit impact is minor because growing profit is driven by insured volume not policy increases which is regulated. Also, some of the insurers have other lines of business and international business.
People don’t want to accept that the price of care and the volume and type of care provided are the drivers of higher premiums. Employers who are self-insured are facing the same growing costs.