I have the good fortune of still being considered an employee, although a disabled one, until next June. At that time, I will have been on Long Term Disability for 2 years and thus eligible for Medicare. My employer will then drop me from the rolls and I will become a ward of the state, albeit a paying ward. I have further good fortune in that my family will not be similarly dropped but, instead, are eligible to move into the unsubsidized “Retiree” health plan, which provides coverage for both retired employees and those who left employment due to disability. The plan is different, and no doubt much more expensive, but hey - it’s better than going without.
My employer subsidizes health insurance at a rate of over $1,100 per month per employee. So each employee receives a company subsidy of $13,200 per year. The cost of insurance above that is born by the employee. For the “Cadillac plan” (my phrase) with the lowest deductible and coinsurance, the cost for a family is about $300 per month ($3,600 per year). The least expensive plan, with higher deductible and highest coinsurance, costs half that amount - $150 per month or $1,800 per year. There are also two “high deductible” plans – generally more attractive to young, healthy and/or optimistic employees – which have a high threshold to meet before receiving any insurance coverage but have “low” premiums. The cheaper of these costs $73 per month (a bit under $900 per year). So the true cost of insurance for a family, inclusive of the company subsidy, ranges from about $14,000 per year for the least-coverage High Deductible plan to almost $17,000 for the most-coverage traditional plan.
These numbers bring to mind several thoughts about healthcare in America:
1. Median family income in New York, where my job is based, is $56,000 per year ($4,000 higher than the national median of $52,000). At that income, a premium of $14,000 to $17,000 per year is unaffordable. Only with a very large subsidy is coverage possible for the average family.
2. I am surprised how expensive the High Deductible plan is. The idea behind these plans is to pay smaller premiums and then fund a Health Savings Account for paying medical bills, should they occur. If an average unsubsidized family still has to shell out $14,000 for the premium, how much more could they really put into an HSA?
3. In the past, I have always selected the “Cadillac” version of my employer’s offerings since the additional monthly premium amount was well within my budget. For the past two years, I have paid about $5,000 to $10,000 in copays, coinsurance, etc above the premium amount. (Note: My insurance is out-of-pocket for about $170,000 over those two years). Could an average unsubsidized family really afford $17,000 in premiums and then pay another $10,000 on top of that each year? If a non-insured person got the same treatment I did (admittedly doubtful) and not paid, would the $200,000 over two years just be passed on from doctors to insurers (and ultimately insured people)?
4. The value of the company subsidy is one of the reasons that working for a large company is better than for a small one. Unfortunately, small companies create the most new jobs in America. Therefore, we are shifting the “true” cost of healthcare to America by virtue of the increase in the portion of Americans who work for small companies with no or low-subsidy healthcare. There are those who feel that healthcare costs will only fall when consumers feel the cost and bargain with doctors for lower charges. I am certain that consumers are feeling the cost but they are powerless to bargain and thus, simply go without and hope not to get sick.
5. State-run healthcare insurance exchanges do nothing to change this dynamic. The core problem is the cost of healthcare, not the method of paying for it.
Okay, so that’s my entry in the recipe contest. For a while longer, I will still be one of the lucky ones, but the cost of healthcare in America is still November’s biggest turkey.
