It was almost exactly five years ago that I decided to embark on a serious emotional and financial path towards retirement. Over 25 years, I had diligently saved, invested, and traded in the stock market to accumulate enough money to allow me to walk out of the hospital and enjoy those post-employment/pre-you-know-what years. One of the biggest unknowns was how much money I would need in order to retire. I worked on a budget and used all sorts of retirement calculators that I found on the internet. My spreadsheet was comprehensive, but mostly stuffed full of “best guesses.” When I was done, I still had only one completely empty cell in my financial retirement planning spreadsheet: the amount I would need for health insurance.
In the pre-ObamaCare days, it was impossible to obtain even a reasonable estimate of what medical insurance would cost. Here’s a brief rundown of my experience with that process. I called Blue Cross of North Carolina and spoke with a woman about individual coverage; she informed me that coverage for me and Ruth at our age would cost around $15,000 per year, but with a huge caveat: that number assumed perfect health. Really? How many people approaching retirement age would you guess are in perfect health, with zero pre-existing conditions? Right. So then the already attention-grabbing number of $15K per year jumped to potentially over $75K per year, depending on exactly what those conditions were and, she continued, Blue Cross might also either deny you outright or exclude those pre-existing conditions from coverage. Quite a price range and no guarantee I would even qualify for insurance that would actually cover anything, but it’s worth a try. So, Madame Blue Cross, what’s my next step in the process to get a quote? I had to fill out a gazillion pages of information on both me and Ruth to actually apply for insurance, allow Blue Cross to obtain all our medical records, and then wait 4-6 weeks for a quote. Then wash, rinse, and repeat with Aetna, United Healthcare, etc., if I wanted to comparison shop. Whew! No wonder it took me five more years to retire! I had to spend all that time shopping for health insurance!
Enter the Affordable Care Act (ACA), otherwise known sometimes less-than-affectionately as ObamaCare. From my stand point, ObamaCare was a personal dream come true. Almost immediately, I could include my 23-year-old still-in-school daughter on my work insurance policy. This single feature of ObamaCare was a huge benefit for me, as well as countless others. I also knew that, from now on, Ruth and I would be able to obtain medical insurance coverage regardless of our medical conditions, and our rates would be based on our age not on the unpredictable state of our health, so I could now go back to planning to retire with expensive — but available — market-priced health insurance. Health insurance is indeed expensive, but interestingly, the change in premium for my health plan from 2013 to 2014 (the year of my retirement) did not significantly increase as compared to prior years. I, of course, have had to pay more out of my own pocket as I am now covered under a COBRA provision that allows me to continue my workplace insurance for 18 months after leaving my place of employment.
Even as a lifelong liberal Democrat-leaning voter, I must admit that my initial reading of the watered-down version of The Affordable Care Act that finally made it through Congress was less than inspiring. There seemed to be relatively no cost savings included in the final iteration of the bill, a huge disappointment in my view, as I have always thought that the amount everyone pays for healthcare is far too high. It was, I thought, in the end, primarily a bill that would allow many more people to actually have insurance, but that insurance still would be funneled through our current for-huge-profit insurance companies. It is a worthy goal, insuring many more people, but it fell far short of my hopes for an actual healthcare solution. (And let’s not even talk about the inept, disappointing, frustrating, ridiculous roll-out snafus.) Upon actual implementation, however, I found there were more cost savings than I had seen at first blush. Until the advent of ObamaCare, the cost of individual insurance was virtually an unknown and incalculable quantity, as I had discovered in my retirement planning five years ago. There was no way to efficiently compare policies or shop around in terms of coverage or cost. ObamaCare changed this. Individual policies that are quite similar are now posted on-line for easy comparison. As more and more people join the individual insurance pool, it becomes incumbent upon insurance companies to reduce the amount of money they spend on medical care. The ACA already limits the amount of money that insurance companies can spend on overhead or reap in profits to 20 percent of the total premiums collected, so for the companies to get more market share and cover more lives, they now have to compete in price with other companies. The goal of any company is to grow and have more customers and, for these insurance companies, we, the insured, are their customers. In order to satisfy the new ACA regulations as well as plan for growth, they have to reduce their costs so they can reduce their premiums. ObamaCare is built upon regulations that guarantee insurance companies will be motivated to put in place programs and fee structures that will reduce medical costs. Already there have been some significant cost reductions in North Carolina. It will be interesting to see how effective these programs are and if this will be able to slow the astronomical rate of increase of medical costs.
In later posts I will discuss and digest the main features of ObamaCare and illustrate both the pros and cons of the program. It is fascinating to me that the strongest opposition to ObamaCare directly relates to peoples’ personal feelings about President Obama as opposed to the actual tenets of the program: http://pollingmatters.gallup.com/2013/11/whats-in-name-affordable-care-act-vs.html.
And with the (admittedly significant) exception of the individual mandate to purchase insurance, most people like the major features of Obamacare:
http://www.arktimes.com/ArkansasBlog/archives/2014/03/26/poll-americans-show-strong-support-for-obamacare-provisions-including-medicaid-expansion. These are critically important points of argument that I feel the voting public needs to know. It’s sometimes hard to separate the policies from the person, but in an intellectual discussion of matters of grave importance to the country, I feel that clinical analysis of the actualities are too often overlooked in a passionate political discourse.
So for me, ObamaCare helped me insure my children until they turned 26, and it allowed me to retire before I reached The Golden Age of Medicare. ObamaCare is not something everyone likes; the Affordable Care Act has a much higher rate of acceptance. In coming posts I will go over in detail some of the pluses and minuses of this huge piece of legislation.
- News Flash–Charlotte Comes in Sixth
- Obamacare–The Why Nots