The New York Times has a good article on the limited balance sheets of many Americans and our inability to absorb a shock. Health insurance has made the systemic shock absorbers better but still insufficient for a lot of people.
the new poll, conducted by The New York Times and the Kaiser Family Foundation, roughly 20 percent of people under age 65 with health insurance nonetheless reported having problems paying their medical bills over the last year. By comparison, 53 percent of people without insurance said the same….
Medical bill problems rarely occur in a vacuum, the survey found. Most of the people surveyed said their finances were tight even before there was an illness in their family….
. Twenty-nine percent of the people with medical bill problems said a family member had been forced to stop working or cut back on hours….“Is that a job problem or a medical bill problem?” said David Himmelstein, a professor of public health at the City University of New York’s Hunter College School of Public Health who has studied medical bankruptcies. “It’s both of those things.”
Medical insurance pays medical bills. It does not cover parking at the hospital, it does not cover unpaid time off to go to an appointment, and increasingly covers a smaller total percentage of the cost of treatment. The ideal solution that can’t be implemented in any reasonable time frame is to have massive wage gains throughout the entire working population while hard to substitute base costs (the ‘nut’) stay constant or decrease in real and nominal terms. Furthermore, increasing the safety net for non-working adults and children would be needed as well as an expansion of cheap credit to act as short term bridges. But we are not building Sweden with better weather.
Other potential solutions may be used as ad hoc bridges.
Kaiser Health News has an interesting article about lump sum insurance that is becoming more common:
Forty-five percent of employers with 500 or more workers offered the plans last year, up from 34 percent in 2009, according to benefits consultant Mercer. Employees are generally responsible for the cost of coverage, although in some cases bosses contribute to the premiums….
Forty-six percent of workers covered by insurance on the job faced a deductible of at least $1,000 in 2015, up from 22 percent in 2009…
plans provide an average $15,000 payout to workers diagnosed with one of the conditions covered under the policy. Plans sold on the individual market pay $31,000 on average, Gen Re said, but applicants generally have to go through medical underwriting to qualify. Employer plans usually don’t require that….
The problem is that this insurance is medically underwritten for the individual market, and the qualifications needed to trigger a pay-out are extremely tight and hard to meet.
japa21
Generally speaking, the two biggest expenses are the deductible and then the out-of-pocket costs. Yes, on expensive treatments, the co-pays can be large but once the out-of-pocket is met the insurance should pay 100%. The area where this tends not to be true is in drug costs.
Although I realize this is unfeasible, I always thought that the bets way to cushion the shock is to make the deductible and out-of-pocket be done on a monthly basis. If the annual deductible is $1,200, the monthly deductible would be $100. For a $5,000 annual out-of-pocket, the monthly out-of-pocket would be a little over $480.
However, I think the premiums would probably be much higher to handle a system like that. Wishful thinking on my part.
Yutsano
To wit: after my hip was replaced, doc ordered no work for 12 weeks. Unless you’re in the situation I am where not only did I have a large bank of paid leave built up but was also capable of getting more through shares and the ability to have sick leave advanced, that time off is unpaid. And that means EVERYTHING, including the insurance premiums you’re paying in. So yeah, without some sort of stopgap, most people are ungestuppt.
Richard Mayhew
@Yutsano: yep, I know that I am in good shape compared to a lot of people. If I had to go without a paycheck, my family starts making some very expensive choices in 2 months if we still need to keep my son in childcare; if we can take him out of childcare so that I can watch him, we could go 5 or 6 months before really bad choices are our only choices.
Now if I was to get unemployment insurance (50% paycheck) or Short term disability (60% paycheck) and my son could be watched by me, we’re okay long term. But I know my situation is very well cushioned compared to a lot of people.
gene108
How is this different than disability insurance, which employers can also purchase for their employees?
Is it just that it’s attached to the medical insurance and not a separate policy?
WereBear
Beware: long term disability insurance is a scam.
My husband has had a chronic illness for 20 years now. He’s coped in various ways, but once his SSD and his private insurance came in, he could live okay, if carefully.
But his private insurer, UNUM (and they change their name regularly,) creates all kinds of hoops to jump through. They demanded he take a minimum number of credits as part of his state provided retraining, even though he and his doctor protested that he could not take on that level of classes. Sure enough, he crashed, hard, and we took four years to build him back up.
During that time, there was a constant demand for checkups, and tests, and the sending of backdated paperwork which, if he was not vigilant and had signed, would be grounds for them to take away the disability payment.
Finally, we couldn’t take it any more, and sued them for a settlement, which was better than losing the whole thing with one booby trapped phone call. Like the one I got, where I said the constant barrage of mis-dated material was looking deliberate and we wanted it to stop. She said she’d send me to the Complaint Department. Turned out, it was the department that was going to complain about ME.
We got a decent sum which we invested, though for not nearly the return we were getting monthly from the insurance my husband was sensible enough to get for years while he was working.
But they play by their own rules. Perhaps the next thing to be worked on is this scam; where people who have gone blind, and people in wheelchairs, are told they can work as telemarketers. And so, they aren’t getting their disability check.
StellaB
@Yutsano: This story made it sound like the woman with lupus lost her home because she couldn’t afford her OOP costs, but says nothing about whether she continued working (probably not), exceeded her 12 weeks of unpaid leave and lost her job, was able to qualify for disability insurance, even knew that she had SDI and applied, was paid enough disability to cover her rent and utilities (doubtful), etc.
If you have a modest income, the disability safety net is unbelievably stingy. Only well paid professionals have any kind of disability security and often less than they think.
MomSense
@WereBear:
Yup, scam. I’m dealing with this right now with my mom. Next time I drive by UNUM, I’ll give them the finger for both of us.
Auntie Anne
Richard – my company is offering these plans this year, although for Accidents and Hospitalization and not for Critical Illness (on the docket for next year). The vendor told us 6% enrollment would be high – we enrolled 13% and 8% respectively. And we did very little to publicize either plan. In my admittedly anecdotal survey of those who elected the plans, most did so to hedge their bets against unforeseen expenses.
Kay
The Obama Administration has to push the new overtime rules thru. I see people who are making literally half again as much money as they do the first 40 hours because they’re paid overtime.
I don’t know why they’re foot-dragging. If Democrats are serious about raising wages they can actually raise wages and it would serve a dual purpose- it would put pressure on companies to hire more people because a lot of the people I talk to don’t want this much mandatory overtime.
Gutting overtime made it much, much harder for working class people. Obama’s out the door soon and it’s executive action. Push it thru and every Democrat can run on it. This is real money, every week.
They are being lobbied heavily. If they punt on this I don’t want to hear about how they couldn’t raise wages because of Congress.
Prescott Cactus
@Richard Mayhew:
Richard, please take a look at your states unemployment website. Things have changed in many places as far as length of eligibility and the amount received. 50% sounds on the high side to me, but YMMV.
Richard Mayhew
@Prescott Cactus: my state is 1/26th of your best quarter in the past five completed quarters excluding the current one plus a cup of coffee per kid for a qualified week… Given that I get paid biweekly it is about 52% of gross pay for people who make under the max limit.
Prescott Cactus
@Richard Mayhew:
I imagined you were on top of it. Another fortunate quirk in the UI program is if you work in two different states (pay taxes in) you are eligible for the benefits in the higher paying state. Called a multi-state claim. That might include referee work. (?)