“I want the Mother of All Health Insurance Plans (MOAHIP), one that will cover all of my doctor visits, my recurring prescription medications, any and all pre-existing conditions, and will insure that I get the newest and best treatments if I ever get seriously ill.”
That sounds great, and is the type of insurance that not so long ago was offered by many large companies as part of their employment benefits. But as was the way with pensions, those days are no more
As people live longer lives the likelihood of experiencing degenerative disease increases. As the human diet has become increasingly industrial, the western medical system has focused on medicating symptoms rather than addressing lifestyle, and as modern life have become increasingly stressful due to our rapid roller coaster work and home lives, the diseases of civilization have become more prevalent. Combine this with a need for tort reform, insurance companies incentivized to exploit loopholes to deny claims, hospitals and doctors incentivized to perform unnecessary tests and provide unnecessary care, and an excessive amount of administrative overhead, and you end up with an expensive system.
No longer able to afford them, employers have abandoned these all-encompassing health plans, resulting in a reduction of benefits and increasing premiums and co-pays. It is easy to understand why many think that the only option is to find a job with good benefits and keep working until you are eligible for Medicare. This is why we get the question, “But… what about health insurance?”
Here is a more detailed answer:
Our primary form of health insurance is to insure we remain healthy. This not only helps reduce expenses, but increases the likelihood of a longer, more joyful life. Health insurance, like all insurance, is purely a financial instrument. It’s a tool of last resort. Whereas car insurance can replace a car, and homeowner’s insurance can replace a house, health insurance will help pay for care of a heart attack but won’t prevent one or eliminate its long term health consequences. Therefore Plan A is to make lifestyle choices that diminish the likelihood of the leading causes of death.
Smoking, excessive alcohol consumption, an affinity for sugar, couch potato syndrome, an irrational fear of vegetables, being a Debbie Downer, owning a car, owning a television, continually running a sleep deficit, and working in a job you hate are a few common behaviors that invite disease and injury. There is a reason that 5 percent of the US population is responsible for almost 50 percent of all medical spending. At the other end, half of the population accounts for just 3 percent of spending, spending an average of only $233 a YEAR. Make yourself part of that half
“You young whipper-snappers are always over-confident with your health, just wait until you get older, then you will see.” That’s a perfect example of the Debbie Downer attitude. The statistics say under the age of 75 you have a 50% chance of spending almost nothing on medical care each year, and that is if you continue living exactly as you do right now. If you make some important lifestyle changes you can tilt the odds in your favor. Sell the television, start riding your bike to work, make vegetables the main course instead of a side (potatoes don’t count), eliminate soda from your life and replace it with green tea, skip the Cheetos and eat an orange, read to keep your mind fresh, listen to your body and let it rest when it needs it, start looking for the silver lining in everything, love someone…. in other words, make your health a priority.
Sometimes though, despite the best of intentions, shit happens. Maybe we will have a serious fall or car accident, or need some emergency surgery. That’s when we want the MOAHIP, so we don’t need to touch any of our savings, right?
Actually, that is the exact opposite of what we want. Those plans are economically ridiculous, and priced accordingly. When I left my most recent employer, we were given the opportunity to purchase a MOAHIP from them at a cost of $1410 a month. The US based High Deductible Health Plan (HDHP) I eventually found on ehealthinsurance.com cost $233 a month, and covers both of us. Paying an extra $14,000 a year to protect against statistically small incidents seemed a bit excessive. Better to save that money and pay cash for any medical care, if needed
Why are MOAHIP plans so expensive? Let’s look at car insurance as an example. If a car insurance policy covered routine maintenance, replacement tires, smog inspections, fixed minor scratches in the paint, and completely covered any accidents even if you were texting while driving under the influence of alcohol, what would they cost? Probably a lot. Compare that to a health insurance policy that covers every expense even if your lifestyle choices aren’t the healthiest. With a MOAHIP, the insurance company has to assume the worst and you pay for it.
A HDHP like we have is one in which the insured pays for all health care up to a relatively high deductible, in our case $10,000. The exception is that one annual health check is paid for in full, since preventative care is the cheapest care, although in reality the premiums are higher to cover this. Since we are traveling, health checks will just be paid for in cash in whatever country we happen to be in. We are unlikely to ever approach $10,000 in care in a single year, but if disaster strikes we are covered. The financial instrument that is the HDHP is Plan B
This is now the only insurance policy of any kind that we have, and I evaluated being entirely self insured. Since we won’t be actively using the policy, the premiums are just a gift to the insurance company. I simply view it as a tax, a hedge in case of development of a serious pre-existing condition, between now and if/when the US implements a real national health care system like the rest of the developed world (Hell, if all that happened was costs went to parity with the rest of the developed world, it would free up 8% of GDP!)
What about if we get very ill and are diagnosed with something that means a lifetime of expensive prescription medication? In theory that is a risk, although the odds of that happening while living a healthy lifestyle are incredibly small. But what is the alternative? To stay working just to have health insurance? The odds of that degenerative disease striking while compromising your life goals are infinitely higher. Your mother was right, laughter is the best medicine. A happy person is a health(ier) person
To support a lifetime of inflation adjusted monthly payments of $233 a month, based on the 4% rule we only need to have invested $70,000. Some people may say, “Sure, this works for you, you are young and healthy.” Thankfully the super statisticians working at the insurance companies make it very clear how much additional risk comes from age. If we were each 10 years older, the same policy would cost us $324 a month, a difference of only $91. 20 years older and it would cost $465 a month, an additional $141
Is working until you qualify for Medicare worth 20 or 30 (or more) years of your life? Is 10 years of your life worth less than $91 or $141 a month (for a couple)? That is probably less than you spend on your cell phone.
When measured in years of your life, health insurance is cheap!