• Health care ain’t easy for those pre-Medicare

    I don’t think I’d be betraying any confidences if I reveal here that my father is no great fan of the ACA. That said, he could not have been happier the day he turned 65. He loves his Medicare. Before that time, while he was somehow able to find insurance for himself, the plan cost somewhere around $15,000. That was before the $5000 deductible. I think I could heal the cheers all the way across the country the day he became eligible for Medicare. My mother, on the other hand, still hasn’t hit 65. She’s counting the days.

    Let’s face facts. Too few people age 55-64 can afford that expense. But that’s what insurance costs on the individual market. That’s if you’re able to find an insurance company to issue you a plan. So many Americans in that age range find themselves uninsured or under-insured. In a recent Issue Brief, the Kaiser Family Foundation looked at that group specifically. They found that just under two-thirds of them have employer-based insurance. An additional 16% qualify for Medicaid or Medicare for one reason or another. Six percent are insured through individually issued plans. This leaves 14% of them uninsured. As we’ve discussed before, many of these people delay needed care because they’re trying to make it to Medicare, when that care is far, far more affordable. KFF sought to see how access and cost affected people age 55-64, with and without insurance, compared to those who are on Medicare:

    • About  four  in  ten  (41%)  uninsured  adults  aged  55  to  64  reported  having  unmet  needs  or  delaying  care  in2010, with concerns about costs cited ad a factor in almost every instance (96%). Almost one-third (30%) of uninsured adults ages 55 to 64 lived in families that had problems paying medical bills.
    • Medicare seniors report significantly lower rates of unmet needs or delayed care (8%) than uninsured adults aged 55 to 63 (41%) and similar rates to adults aged 55 to 64 with private insurance (17%), after controlling for health status, income, and other demographic factors.
    • Over the years, the share of individuals with problems accessing care had remained relatively constant among seniors on Medicare (from 7% in 2004 to 8% in 2010); in contrast, it has significantly increased among uninsured adults aged 55 to 64 (from 32% in 2003 to 41% in 2010) and among same-age adults with private insurance (from 11% in 2003 to 17% in 2010).
    • Medicare appears to have muted the effects of rising costs for prescription drugs for seniors between 2003 and 2010 relative to adults aged 55 to 64 with private insurance, likely because of the addition of a Medicare drug benefit in 2006. However, problems paying medical bills increased for insured 55- to 64- year-olds and Medicare seniors alike.

    Let’s tick off what we know. Being uninsured while 55-64 means having unmet medical needs and delaying care because of costs. Seniors on Medicare have fewer unmet needs or delayed care than either uninsured or privately insured people age 55-64. While things have been stable for those on Medicare, they’ve been getting worse  for both  uninsured and privately insured people age 55-64.

    What will be done for them if the Affordable Care Act is struck down or repealed?

    @aaronecarroll

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    • And if the pre-Medicare are delaying care then they tend to be sicker when the do qualify for Medicare driving up medical costs.

    • Your father is exactly the reason the Act is in trouble: the elderly want Medicare for themselves and screw anyone else. I hate to say that but I am tired of the elderly being such pissants. And I am on Medicare due to having MS. I WANT everyone to have what I have. It is a moral crime that any American of any age has to worry about their health care. As a supposedly Christian nation, we sure do harm others quite nicely. Sad.

    • Insurance, by its nature, is to protect against an unpredictable disaster, not to fund the costs of a highly predictable and maybe even likely event.

      But, it is the people with expensive diseases who need the most help with the cost of their care.

      It is not all that unlikely that a man who has had high blood pressure and high cholesterol for years will have a serious heart problem. He’s a bad bet. But refusing him insurance doesn’t solve the issue of how is he going to afford the open heart surgery he needs.

    • I’m going to offer a slightly more nuanced version of bokun’s comment. Seniors are politically conservative compared to people under 65. Their turnout in elections tends to be higher than other age groups (iirc), since they don’t have to take time off work. So, the political process is slightly biased towards them.

      The Republicans they tend to elect are all, currently, all for slashing and burning government. It worries me that current seniors have been averse to the ACA because they see it taking away from Medicare – and they will likely be averse to a lot of forms of investment in the needs of younger folks, if they’re seen as threatening benefits for seniors.

      However, if the Republicans slash and burn Medicare, they’ll really hear it from seniors. One thing that worries me is what happens if Republicans come to power, and they then abolish Medicare for people currently under 65 or 55, like the original Ryan plan. That would be the worst of both worlds. I want Medicare for everyone, but if we abolish it, we should spread the pain. And in fact it is not wrong to ask seniors to share some of the pain of fiscal consolidation – we are, after all, all in this together, and folks like me are paying taxes to fund their current Medicare benefits. Because thanks to medical cost inflation, seniors have funded nowhere near as much Medicare benefits as they’ll consume.

      Also, seniors tend to be disproportionately White, and folks under 65 tend to be much more people of color (and that’s especially true of the Millenials, iirc). It has to be said that we have a race-based conflict as well. Conservative Whites are starting to feel like their country is being taken away from them. And it is true that births in the US are now majority non-White. While it is hogwash for White seniors to think that the rest of us are taking ‘their’ country away from them, it could very well turn out that the representatives those seniors elect could try to take the country away from everyone else.

    • Let’s tick off what we know. Being uninsured while 55-64 means having unmet medical needs and delaying care because of costs.

      Of course having assess to standard medical care is not always good. I know a guy who when he was in his early 60s had problems in his legs but he could walk and work and was in good health otherwise. Because he would have had to pay out of pocket he held out for medicare rather than going to see a doctor. When he got medicare he went to a doctor who diagnosed an aneurysm. The doctor said his heart was not healthy enough to operate so the doctor got him a heart bypass (which I think was completely uncalled for). He has never really recovered and though still alive can no longer walk more that a short way since the bypass. Be careful what you wish for.

    • 1. Under the current regime, people like your Dad would be better off with a catastrophic plan with a $30-60K deductible and substantially lower premiums. People in the 55-65 demo have substantially more income and assets than younger cohorts, and virtually all of them would be better off holding onto the 15K a year they’re forking over in premiums than handing it over to insurance companies on the chance that they’ll sustain a medical catastrophe.

      Means tested tax credits/rebates and/or direct transfers would be a much more precise and cost effective means of helping those who cannot afford to pay for the care they need,and wouldn’t place the burden of subsidizing their premiums on the backs of younger, poorer people with fewer assets.

      2. Going forward, a much more rational and efficient regime would revolve around “life-cycle” health insurance. That’d start with low-premium, high-deductible insurance for the young coupled with HSA’s. Once they hit an age where both premiums and medical needs go up, they have an accumulated balance with which to fund more extensive coverage, out of pocket expenses, etc. Make the balances transferrable upon death, donatable to other family members or charities, etc and you have a mechanism to finance all but the most desolating medical crises.

      For those who don’t make enough money to adequately fund an HSA, etc – means tested tax credits and transfers.

      3. Summary: Insurance that is actually insurance,

      • People age 55 to 64 also tend to have a higher prevalence (and maybe incidence) of chronic conditions. Those mean you have to seek ongoing care, which costs money. Those raise the chance of an acute care episode (e.g. my father in law is about 63 and just discovered he needs 4 stents, despite being relatively asymptomatic).

        Medical expenses are very, very widely distributed. You might have maybe $1,000 of mainly physician visits and prescriptions in most years, and then one year you have $100,000 in hospital bills (happened to me, for example). Savings and assets are very, very poorly equipped to handle expenses as catastrophic as medical expenses.

        Besides that, did you actually mean a $30,000 deductible, and not a $3,000 one? I think only the 1 percent could handle a $30k deductible that they actually hit.

    • @ Jay B:

      That’s nice in theory,you have to look at the probabilities of outcomes. When I renewed my insurance, the sweet spot was a deductible of $1,000. A policy with a $2,500 deductible was savings wasn’t worth the risk of greater out-of-pocket. This is a private insurance plan, paid for by us, so we looked at what was likely to leave us with the lowest out-of-pocket total.

      My guess is that once you hit some number, and I’d bet it’s below 10K$, the savings isn’t that great with a higher deductible.

      Further, when people start accumulating assets of $30-60K in an account in their names, there will be pressure to allow them to use that money for something else. Watch it be allowed to be loaned back to the account owner to buy a house, send their kids, etc.

      All of this is supposed to goose the market into working. I think we need better gov’t regulation. I’d start with hospital bills. No business can give 50% discounts to the bulk of their customers, hence the “real” price on those hospital bills is bogus.

    • Jay B:
      Very good out-of-the box thinking.
      We need more people like you who really put some thought to how to alleviate some of our premiums.
      SAO brings up a good point regarding the accumulated savings.
      Instead of being available in cash, or to transfer at death, the savings should be owned by the insurer, yet “set aside” for that particular family to help pay medical bills.
      The savings need not be dollar for dollar, as insurance helps provide a “multiple of dollars,” in addition to the “savings.”
      One can accumulate $25,000-$50,000 of “savings” in 2-4 years by paying $100-$400 per month. And, because these savings are owned by the insurance company, the insured gets the return benefit of a paid-up policy. With only catastrophic premiums to pay, the insured saves 60-80% off a traditional premium.
      Our fourth meeting with Milliman, an actuarial firm, will be in a couple of weeks.
      We are getting closer to presenting these figures to an insurer, with Milliman’s assistance.
      Don Levit

    • You can quote me … assuming they don’t trash the Health Savings Account (HSA) code/regulations: “35 years ago, no one had ever heard of 401(k) … 35 years from now, everyone will have a HSA” (Health Savings Account).

      My only regret, as I close in on medicare eligibility myself, is that I didn’t have this tax favored alternative that my children now have to accumulate savings at younger ages (they are 27 and 24) – monies that could be set aside to accumulate tax deferred and potentially tax free in anticipation of future medical expenses.

      On the other hand, as a benefits weenie, I was in a position to manage my company’s retiree medical program in such a way so that it was, is, continues to be, for the most part, financially sustainable. I am covered, at age 60, under that plan today as a retiree.

      However, before I retired (within a month of health reform’s effective date in March 2010), I recommended my employer announce that company-sponsored retiree health coverage be eliminated for current and all future retirees – effective January 1, 2014. The employer financial support for coverage would continue (based on funding through a retiree medical account over the last couple of decades). The proposed action was final change in an over 25 year effort to shift my employer’s retiree medical program from an unsustainable “defined benefit” method, such as those incorporated into PPACA and Medicare, to a “defined contribution” method. You might call it “voucher”, or maybe “premium support” – depending on whether you are a D or an R.

      Had my proposal been approved at that time, it would have been announced prior to the comparable change announced by 3M. Just so you know, health reform will prompt the dwindling number of employers who still offer retiree medical (except public employers and employers of represented employees) to accelerate any plans they had with respect to reducing the offer of retiree medical – whether the individuals are medicare-eligible or not.

      For past trends – see: Section 11: http://ehbs.kff.org/

      For a glimpse into the future for employer-sponsored retiree medical coverage – see: 3M: http://www.hreonline.com/HRE/story.jsp?storyId=533338033

      Some of the comments above suggest we should expand medicare so that it applied to individuals at younger ages. Whose gonna pay for that? Simply, if I were age 65 today, and if I had always paid in the maximum Medicare Part A taxes (at the wage base for years after 1993), I would have contributed about $33k (equal amount from my employer) as advance funding for Medicare Part A hospital coverage that might remain in effect for 10, 20 or 30 years. And, other than my income taxes to general revenue, I’ve contributed nothing to fund, let alone advance-fund Medicare Parts B (physician) and D (Rx). That is, we have all of these older and disabled Americans who think they have funded Medicare, that they have earned the benefit/coverage they currently have, when, in fact, all of us allowed our elected representatives to promised far, far more than they were willing to tax (or we were willing to pay).

      I’m reminded of the famous saying – “don’t tax you, don’t tax me, tax that guy behind the tree”.

      And, this is an equal-opportunity dodge … where the most recent expansion (explosion of long term unfunded liability) comes from Bush II’s Medicare Part D.