CPCUG Health Care

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CPCUG Health Care
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Quickie Recommendation

• Goal Reduce health care expense for basically
  healthy person in upper 40s
• Get fee-for-service policy with 1,000 deductible
  for 118.20(Carefirsts price in MD). Set aside
  83.33 per month to cover the deductible.
  Worst-case scenario is loss of 1,500 best-case
  is 1,000 in bank
• Increase the 118.20 by 15 for each five years
  over 49

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Lets Start With Prices
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Same Chart In Numbers

• 100/1000 is 3,516
• 200/2000 is 2,916
• 500/5000 is 2,208
• 1000/2500 is 1,416
• 2500/4000 is 1,164
• 5000/6000 is 888
• 10000/10000 is 588

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If Im Not Basically Healthy

• Exercise one of your mandatory issue options
• Carefirst COBRA is 3,816 (vs. 1,908 for
  underwritten) for a 400/2000 policy with a 25
  copay or 3,000 (vs. 1,500 for underwritten) for
  a 800/2000
• In December, many plans have open enrollment and
  buy temporary insurance till then (I paid 61 a
  month)

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Plan B Go HMO

• 210 monthly for 30 primary copay/40 specialty
  copay (211 in DC, 208 in Virginia)
• 269 monthly for 10/20
• HIPAA is more than double (560 for 30/40)

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Health Insurance is A Real Problem

• The very poor have Medicaid, but there are about
  40 million working poor and unemployed with no
  coverage
• 2nd leading cause of bankruptcy in the US
• GM pays about 1,300 per car or 4 hour for
  health insurance
• Its becoming an issue in US cost competiveness

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Health Insurance is many things

• Real insurance against large financial loss
• Prepayment plan for ongoing expenses
• Option (right but not obligation) to buy health
  insurance in the future
• Access to negotiated prices from member
  physicians

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Real Insurance

• Compensation against low probability random
  events with serious financial consequences that
  could happen to anybody
• If enough anybodys fear The Bad Thing, you can
  start a insurance business small money for big
  payoff
• If people have private information, you have a
  moral hazard problem unless participation is
  mandatory

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Level Payment Plans

• You couldnt create an insurance business around
  heating bills
• It happens to everybody, not a few anybodies
• The price would be the average cost
• People have a certain amount of routine care
• Having insurance pay this is relatively expensive
• Cost about the same to process an 80 visit as to
  process a 5,000 surgical procedure

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Option to Buy In Future

• Sooner or later, everybody dies
• Shortly before they die, they are deathly ill
• Sometime before they become deathly ill, they
  become uninsurable
• The right to buy insurance in the future becomes
  more valuable as people become older or sicker
• Its value can be seen in the price difference
  between permanent and temporary insurance

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Health Insurance Is Not Anything Else

• Does not provide financial support due to illness
• Thats disability insurance
• Does not provide for custodial care if illness
  makes it impossible to do normal functions, such
  as cooking or using the toilet
• Thats long-term care insurance
• Does not guarantee access
• Still have to get a doctor to agree to see you
• Does not guarantee health
• Unemployment insurance doesnt guarantee a job
  either

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Getting Smarter About Insurance

• You probably didnt think about it when an
  employer was paying for it
• What was the cost of that policy
• What was the cost of services paid by that policy
• People have predictable thinking errors about
  negative risk
• Overestimate low-probability bad things
• Underestimate high-probability bad things
• Understanding underwriting
• Understanding cost reduction with high deductible
  policies

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Getting Underwritten

• Clearly, passing underwriting is a key to cheaper
  coverage
• The Basic Principle of Underwiting is

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Insurers Are Bookies
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Goal Is To Screen Out Bad Risks

• For permanent policies, they are estimating
  your projected cost of illness against the
  average population the same age
• Many things that are not illnesses are
  statistical precursors of illness
• Depression, weight, blood pressure

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Possible underwriting responses

• Yes
• No
• Rating (this is, an increase in price)
• Temporary exclusion of a pre-existing condition

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Underwriting Tips

• I recommend using an insurance broker and having
  a relationship with a doctor before application
• Brokers dont charge extra and are used to
  underwriting arguments
• If you are turned down, the reason may go to your
  doctor
• Good brokers and good doctors will argue with
  underwriting turndowns if justified
• My broker is lyboardman_at_starpower.net,
  800-643-0535, licensed in all 3 jurisdictions
  (this is not an ad)

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Managing your expenses

• You need to know when to go to a doctor and when
  not to go
• Recommend Medline (www.nlm.nih.gov/medlineplus/)
  and WebMD (www.wedmd.com)
• DO NOT GO TO AN EMERGENCY ROOM UNLESS YOU HAVE A
  REAL EMERGENCY
• Learn how to manage recurring conditions

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Doctors Are Small Businesses

• Providing a service for which they deserve to be
  paid
• They dont like insurance companies either
• Offering cash and being flexible about scheduling
  can lead to negotiation, especially for less busy
  practices
• Make sure they know you dont have rancho deluxe
  coverage and deal

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Managing Expenses (cont)

• Remember, you can negotiate
• I got 10 off a dentist bill for paying cash and
  talked a therapist into accepting the group
  payment rate
• You can also travel
• This is one of the most expensive areas in the
  country
• Story in Tiempo Latino about people going home
  for care due to cost

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Managing Expenses (cont)

• Consider applying separately if there is an age
  difference between the spouses
• Bunch expenses into the same calendar year
• Get IRS publications 535 (Business expenses), 334
  (Tax guide for small business), 502 (Medical
  expense)
• Easier to deduct health, disability, and
  long-term insurance for non-corps than it was

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Why Are We In This Mess?

• Actually, every country is having health cost
  problems
• Keeping people alive into advanced ages is
  expensive and researchers keep coming up with new
  (and expensive) things to do
• If they hadnt invented Lipitor, statins, calcium
  blockers, blood pressure agents, etc
  pharmaceutical costs would be lower and more
  people would die younger from cardiac conditions

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Particular US Problems

• Coverage isnt mandatory
• Its part of your tax bill in most countries
• I needed to file emigration papers to cancel my
  Dutch insurance
• Uninsured people still get care
• Legal and moral duty to provide emergency care
• Spend-down provision in Medicaid may be useful to
  you
• Insured people take up the slack, increasing
  insurance cost, causing people to drop insurance

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US Problems (cont.)

• Insurance comes from employers
• If its not your policy, you cant take it with
  you
• Was less of a problem when people had lifetime
  employment
• Insurance deductible to employers, but not
  individuals (usually)
• People are shielded from costs
• They only see the copays
• The managed care buyin was elimination of
  deductibles
• So they get less needed services

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US Problems (contd)

• Relative lack of countervailing forces
• In Canada, they forced the doctors to unionize
  and fight with each other
• In some countries, only the government builds
  hospitals
• Keep in mind the free-spirited nature of American
  health care is why this is so little waiting and
  why so many rich foreigners come here
• A surprisingly well-functioning system of charity
  care
• Medicaid for low-income low-asset people
• Most cities have a St. Elsewhere that provided
  care to the poor at a loss
• Medicare considered charity care an allowable
  expense

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Some Interesting URLs

• www.govbenefits.gov Identifies government
  benefits you may be eligible for (including
  Medicaid)
• www.healthcareforall.com Proposal in play for
  covering the uninsured in Maryland
• dchealth.dc.gov/services/medicaid/medicaid.shtm
  DCs health department
• www.dhmh.state.md.us/ MDs health department
• http//www.dmas.state.va.us/mb-consumers.htm VAs
  health department
• www.irs.gov/pub/irs-pdf/p502.pdf Health care
  deductions
• www.destinationrx.com Drug price information