Wednesday, November 12, 2014

Obamacare: The other shoe is dropping

In early February of this year we posted about our experience with Obamacare.
Affordable Care Act: The Verdict is in

As two people too young for government healthcare and with no employer healthcare coverage, we are in the group that Obamacare proponents always reference when talking about how good the program has been for the uninsured. We also had to use to obtain our insurance. So we are about as committed to Obamacare as any user could possibly be.

We described the bottom line back in February as follows:
"The good news is that my wife and I are now able to buy a healthcare plan with a $500 deductible. The bad news is that the annual premium is $10,200. before the ACA, we could have purchased a plan with identical coverage and a $3,000 deductible for an annual premium of $2,400. So we're paying an additional $7,800 per year to buy our deductible down by $2,500. Not a great deal."

In that February posting and in this August 2013 post (The Real Healthcare Scam), I covered how both Republicans and Democrats refuse to address the real cause of exploding healthcare costs: the refusal to address the monopolistic and anti-competitive pricing practices of the entire healthcare industry. Everyday, hospitals, pharmaceutical companies, doctors, and insurance companies operate their businesses in ways that would put the managers of any other industry in the US into jail for failure to comply with the nations anti-trust laws. Healthcare consumers in this country bear the burden for this lack of government oversight.

Effectively, all Obamacare has accomplished is make available insurance policies on structured exchanges at higher costs than before. I maintain that until these higher costs hit the employer provided plans, and most importantly, the medicare community, that there won't be much demand for change. Well now the other shoe has dropped and the new plans for 2015 are being rolled out. For us, we're seeing deductibles go from $500 to $10,000 for the same coverage. If we're willing to pay 50% of the costs (up from 0% this year) for all services (doctor visits, lab work, hospital visits, prescriptions, etc.) then we can drop our deductible to $250. That's great as long as we never use the $10,200 annual premium insurance.

So it looks like plans are keeping the premiums the same for 2015, but are drastically passing on the costs of using the insurance on to the policy holders. Alternatively, we could pay about 50% more in premiums ($15,000 annually) and keep our 2014 coverage levels.

Again, when this cost shift starts to happen in the employer plan and medicare markets it's hopefully game over. Maybe then the citizens of this country will start to wake up and demand that our politicians quit bowing to the largest lobby in the country and finally address the real cause of spiraling healthcare costs. I'm not holding my breath though.

In the meantime, we'll continue paying $10,200 per year for coverage that we will try our best to never use. That's when the real costs to us would kick in. Paying 50% of the cost for a criminally priced $40,000 hospital visit would be a real budget buster!


  1. I praise you for talking about a taboo subject, rather than cheerleading about scenery and "freedom of the open road" escapism.

    The escalating cost of health-care is likely to sink the next generation's ability to retire early and enjoy a really top-notch lifestyle. They will have to put in the full complement of years in some miserable corporate or government cubicle. Then they will retire at the conventional age, buy an RV, have fun for a few months or couple of years if they're lucky. Then they'll start having health problems that cause them to "turn in the keys." Do they have any idea how evanescent those few months or couple years of health and vitality are?

    On a more optimistic note, a young adult hoping to retire early might still consider taking ANY job in the Federal sector, including military service. These might be the only options remaining, for early retirement.

  2. When we graduated from college, only people who couldn't get a job in the private sector went to work for the government. Now those people look like geniuses with their generous pensions and retiree health benefits. However, over the next 20-30 years that may all change. Future pension and retiree healthcare obligations are threatening to bankrupt many governments. The federal government can print money to pay these obligations (for now), bot state and local governments can't. All taxing jurisdictions are reaching the limits of how much tax revenue they can wring out of their constituents. France has more people employed in the public sector than the private sector and that dynamic is a severe drag on their economy. The US is heading in that direction, and in the meantime the current payroll, current benefits, and all retiree benefits slowly strangle their budgets and take financial resources from other programs.