One of the major issues in this election is the rising cost of HEALTH CARE, and very few candidates are coming up with answers. Over the past five years, pay raises have averaged 2% annually (many people have had their pay cut). Meanwhile, a typical health insurance premium (cost of coverage) have risen an average of 10%, and I just saw one company's renewal rates come in with a 17% increase). Imagine what happens if this trend continues to compound over the next five years, as it has for the previous five. This expense, crowning all the others that have run out of control, will sink us. BUT there are solutions; you're just not likely to hear them from the politicians, because they are too short-sighted and beholden to special interests.
Let's explain what is happening by looking at a scenario based on historic numbers...
- Bob earns $600 per week.
- This year his boss, Gerry, will pay $1,800 per month for Bob's full family health plan insurance coverage.
- Gerry runs his business on tight margins; he turns a small profit and needs to keep his budget balanced.
- If Gerry stays with the same plan, the $21,600 he pays annually into the plan will rise to $34,787 ($21,6000 x
1.10 x 1.10 x 1.10 x 1.10 x 1.10) in five years time.
- Assuming a 25% tax rate, Bob's annual take home pay will only go from $23,400 to $25,835 ($23,400 x
1.02 x 1.02 x 1.02 x 1.02 x 1.02) in five years time.
This rasies several questions... How will Bob weather the coming inflation? How can Gerry afford to keep his doors open? With revenues that grow at only 5% per year, Gerry can not afford to continue offering this fully-paid benefit.
- Gerry has to ask Bob to pay a portion of the plan.
- He looks at a scenario where Bob contributes 5% the first year, 10% the second year, and so on up to 25%.
- The contributions allow Bob to limit his company's health premium cost increases to 3% per annum.
BUT, this raises another question... How will the increasing contribution burden affect Bob's salary? Bob's take home pay will plummet from $23,400 to $19,313. Gerry sees this and scratches his head. He needs a better solution.
- The befuddled business owner calls his broker, who suggests that he look at a plan with a high deductible.
- With a $3,000 family deductible option, the monthly rate drops from $1,800 to $1,300 per month.
- Gerry likes the look of this. The premium total comes to $15,600 per year, saving $6,000 in expenses.
- Bob will have to take responsibility for up to $3,000 in out-of-pocket expenses, but all of his preventative
medicine, such as annual physicals will be fully covered.
SO, our next question... Does this plan make sense for Gerry and Bob over a five-year span?
- Gerry crunches some numbers and finds that health insurance expense will actually be $17,160 with the
upcoming 10% increase in his renewal.
- At the end of five years, he projects it to become $25,124.
- Meanwhile, Bob's take home salary will go from $23,400 to $25,835.
- This means that the health insurance expense, which is equal to 72% of Bob's take home salary will almost
equal 100% of Bob's take home salary in five years time.
What's wrong with this option?
We can run these scenarios with HSA plans and Healthy Options, but the long-term picture is always going to come out with a similar result. Businesses, insurers, and government have
for too long been focused on short-term transactions, to the detriment of our long-term economic health. How long can we keep following them along this path like a bunch of lemmings?
One personal story: Our local hospital wanted to charge $820 for an evening visit to the emergency room that resulted in two-hour wait, followed by my son getting an ace bandage wrapped around his ankle. The doctor who tended my son billed her services separately at $75; I have no problem with that. Why does the hospital service cost so much? When I stubbed my little toe on a rock on the beach and broke it; I decided to forgo the doctors, splinted it to next toe, and wore flip flops for two months, because it was too painful to wear regular shoes. My toe is recovering, and it didn't cost me half a month's pay.
The upshot of all this is, we must start to take responsibility for our own bodies...
... exercise more
... eat less
... eat better
... drink filtered/purified water
... take a first aid course
... question every line item on our health service bills
... demand safe pharmaceuticals and clinical studies on inexpensive natural remedies
... cook from scratch to avoid chemical additives and unhealthy sweetners
... vote with our dollars by purchasing local farm fresh and organic to create favorable supply and demand
... and heck, get off the couch and try growing your own apples, peppers, and tomatoes (It's a satisfying workout!)
So that's our trip to the watering hole... I can not make you drink, but I urge you, please, drink the water, not the Kool-Aid. Meanwhile, let's identify the practical political candidates, insurers, and providers and work with them to create a new system that works. Click here for key article about HEALTH CARE COST INFLATION.
Also look into the Medi-Share Option. NOT a government program.
Wendy Fachon
Wake Up People