Author Topic: Healthcare in Early Retirement?  (Read 5819 times)

Narumi

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Healthcare in Early Retirement?
« on: March 13, 2012, 09:27:59 AM »
So, I was reading the "What's your number?" thread below, and it got me thinking on something that I've wondered about since I found MMM: How are healthcare costs covered in your ER plan?

I know that with traditional retirement, you can often keep your employer's health plan, or you'll have medicare. What about those Mustachians who retire early? We can't all be in peak health, so how do you cover that? Are you including a monthly insurance premium in your calculations for FI?

I, for example, have asthma- meaning that I will be on an expensive maintenance medication for the rest of my days. No health coverage is not an option. So do I need to be budgeting a large premium payment into my dreams of ER?

arebelspy

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Re: Healthcare in Early Retirement?
« Reply #1 on: March 13, 2012, 10:15:25 AM »
Let's start this discussion with the MMM article addressing this topic directly:
http://www.mrmoneymustache.com/2011/09/21/i-can-never-retire-because-of-health-insurance-waaah-waaah/

And now discussion can begin with that information in mind.  :)
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
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We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

arebelspy

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Re: Healthcare in Early Retirement?
« Reply #2 on: March 13, 2012, 10:17:31 AM »
So do I need to be budgeting a large premium payment into my dreams of ER?

That may indeed be the case.  Everyone's situations are unique, and the key thing about Mustachianism is getting your expenses down.  Mandatory health expenses are - more or less - non negotiable.  That doesn't mean you shouldn't shop around, but that you will have some expenses for them.

The key thing is track your expenses, know what you need, reduce where you can, and then save to cover what you need.  In your case, that may include a more expensive form of health care.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

TLV

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Re: Healthcare in Early Retirement?
« Reply #3 on: March 13, 2012, 10:30:33 AM »
I'm hoping that nationalized healthcare makes some significant progress in the next decade. I'm fortunate enough to have comprehensive coverage through my employer for now, but my wife has Crohn's disease which will make insurance expensive (or impossible if the GOP gets its way) to get without an employer.

velocistar237

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Re: Healthcare in Early Retirement?
« Reply #4 on: March 13, 2012, 12:31:43 PM »
I plan on switching to part-time work when I have enough saved to cover everything but health insurance, college savings, and the mortgage. Eventually, I'll save up enough to cover insurance, too. If the system improves before then, or if I can move somewhere where insurance is cheaper, that's a bonus.

MacGyverIt

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Re: Healthcare in Early Retirement?
« Reply #5 on: March 13, 2012, 07:00:48 PM »
This was a pretty damned depressing article:

http://www.oregonlive.com/health/index.ssf/2012/03/health_insurance_will_cost_mor.html

Health insurance will cost more than the typical family earns in 2033, Oregon study predicts
Tuesday, March 13, 2012, 4:15 PM
 By Joe Rojas-Burke, The Oregonian
 
Annals of Family Medicine
The federal Affordable Care Act is projected to slow health insurance cost increases, but it will buy only four more years until the costs of coverage exceeds median family income, according to an analysis published in the Annals of Family Medicine. Health insurance for a family will cost as much or more than the annual earnings of half of U.S. households by 2033, if insurance premiums and wages continue to grow at recent rates.

And while the federal Affordable Care Act is projected to slow the rate of growth, it will buy only four more years until the costs of coverage exceeds median family income, according to an analysis co-authored by Dr. Jennifer DeVoe of Oregon Health & Science University.

The researchers warn that the U.S. health care system is headed toward a meltdown unless the country can agree on reforms that substantially curb the growth of spending.

"We're not bending the cost curve enough," says DeVoe, a family medicine physician and associate professor. "It's an unsustainable system."

Health insurance costs have raced ahead of wages for many years. Annual premiums for employer-sponsored family health coverage exceeded $15,000 last year, up 9 percent from 2010, according to surveys by the Kaiser Family Foundation and Health Research & Educational Trust.

From 2000 to 2009, health insurance premiums jumped 8 percent each year on average while household incomes only rose about 2 percent a year. DeVoe and co-author Dr. Richard Young of John Peter Smith Hospital in Fort Worth, Tex., projected the growth of insurance costs and wages from 2010 to 2040 based on the observed trends from 2000 to 2009.

Their projections factored in the Congressional Budget Office's estimate that the Affordable Care Act would curb the growth of private health insurance costs to 7 percent a year. Even with that assumption, the researchers estimate that the average cost of a typical family's health insurance premium will equal half of household income by the year 2022. If out-of-pocket costs are added to the premium costs, we'll reach the 50 percent threshold before 2018.

"It rings true," says Don Antonucci, president of Regence BlueCross BlueShield of Oregon. "The system we have today is clearly broken."

Spending on health care accounted for less than 5 percent of U.S. economic output in 1950. Today, health spending accounts for more than 17 percent of gross domestic product.

New medical technologies are probably the most important driver of health care costs. Medical innovations, such as kidney dialysis and high-tech body scanners, tend to make it possible to detect and treat previously untreatable conditions, thus saving lives while adding whole new categories of spending.

Insurance coverage, meanwhile, has allowed most people to partake of the benefits of high-tech medicine unburdened by the true costs, which has boosted demand. For decades, payment incentives have generously rewarded doctors, hospitals, imaging centers and other medical providers for doing more tests and procedures, even if they aren't needed.

The Affordable Care Act includes several long-term measures intended to control spending. For instance, it calls for the formation of Accountable Care Organizations. In Oregon, these groups of doctors, hospitals and other caregivers will be responsible for coordinating all mental, physical and dental care for people covered by Medicaid, the government program for the disabled and poor. The state is designing payments to reward caregivers for keeping members healthy and achieving quality goals.

Savings are expected because poorly coordinated care results in a lot of wasted spending and missed opportunities for preventive care that could keep people out of the hospital.

Some experts assert that getting spending under control will require getting consumers to be more responsible as purchasers of medical care -- and minders of their own health.

"We need a cultural shift, where people are asking about cost in addtion to quality," says Antonucci, the Regence executive. He says health reform also needs to focus on helping people make their lifestyles more healthy.

DeVoe and Young don't disagree, but writing in the Annals of Family Medicine they say that the U.S. will ultimately have to take a stand on limiting access to some services:

"The tipping point may come when patients and physicians realize that we cannot provide all possible services to all people, no matter how rare the benefit or expensive the service. The recent approval by Medicare of the prostate cancer drug sipuleucel-T (Provenge), which will cost an estimated $93,000 for treatment to increase life expectancy by 4 months, is an example of a very expensive service contributing to health care inflation."

As it stands, DeVoe says our system rations care by denying services to people who can't afford good health insurance. “Nobody wants to talk about explicit rationing, where you decide what services will be provide and what services will not," she says.

- Joe Rojas-Burke


© 2012 OregonLive.com. All rights reserved.

HeidiO

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Re: Healthcare in Early Retirement?
« Reply #6 on: March 14, 2012, 10:59:10 AM »
Can you move to Thailand?  Okay, that's not a real suggestion.  I will face this issue also, if I am able to retire in 12 years at 50 yo, as is my plan.  I hope there will be an affordable option by then, but part of my goal for the early part of my retirement will be to spend quite a bit of time in other, more affordable countries.  I have diabetes, and while it is very mild when I am very vigilant about diet and exercise, I have never gotten to the point where I could stop taking meds (my MD once took me off the meds b/c I was doing so well - my body let me know very fast that that was not an option.)

Balance

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Re: Healthcare in Early Retirement?
« Reply #7 on: March 15, 2012, 11:27:35 PM »
Can you move to Thailand?  Okay, that's not a real suggestion.  I will face this issue also, if I am able to retire in 12 years at 50 yo, as is my plan.  I hope there will be an affordable option by then, but part of my goal for the early part of my retirement will be to spend quite a bit of time in other, more affordable countries.  I have diabetes, and while it is very mild when I am very vigilant about diet and exercise, I have never gotten to the point where I could stop taking meds (my MD once took me off the meds b/c I was doing so well - my body let me know very fast that that was not an option.)

I watched a 60 minutes episode last year regarding health costs in other countries specifically Thailand and India.  I believe the one hospital they detailed on was called Bangarang (spelling?) in Thailand.  The facility was much cleaner and nicer than most hospitals in America and they even said it was comparable to a 4 star hotel. The greatest thing of all was that the procedures were a fraction of the cost that is charged in the U.S. You may also think that the doctors are inferior and the after care is sub par but that isn't the case either. They have background information on all the doctors and most of them are well trained doctors from the U.S who studied at top tier schools and have experience at major hospitals. Definitely something to consider.

AJ

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Re: Healthcare in Early Retirement?
« Reply #8 on: March 16, 2012, 05:51:24 PM »
I watched a 60 minutes episode last year regarding health costs in other countries specifically Thailand and India.  I believe the one hospital they detailed on was called Bangarang (spelling?) in Thailand.  The facility was much cleaner and nicer than most hospitals in America and they even said it was comparable to a 4 star hotel. The greatest thing of all was that the procedures were a fraction of the cost that is charged in the U.S. You may also think that the doctors are inferior and the after care is sub par but that isn't the case either. They have background information on all the doctors and most of them are well trained doctors from the U.S who studied at top tier schools and have experience at major hospitals. Definitely something to consider.

Ever wonder why that is?

A couple years ago, my dog got really sick and it turned out to be an infected uterus. It cost $2,000 for a very delicate spay. My first thought was "$2 grand! That's so much money for a spay, they usually cost maybe 1/10 that." But then I it occurred me to that vets go to school just as long as doctors, and the procedure is the same, but a human hysterectomy would cost waaayyyy more than $2k. A large part of the difference is in the malpractice insurance. Often, a US doctor's malpractice insurance costs more than their annual salary.

Edit: I should note that I know that is not the *only* reason veterinary procedures cost more than medical ones. Just one reason...

James

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Re: Healthcare in Early Retirement?
« Reply #9 on: March 17, 2012, 08:16:19 PM »
A large part of the difference is in the malpractice insurance. Often, a US doctor's malpractice insurance costs more than their annual salary.

I provide anesthesia, and have to agree that malpractice is a huge extra cost to health care in the US that most other countries have managed to avoid.  The healthcare changes enacted recently by Dems does absolutely nothing to "bend the curve", it will actually increase costs by limiting cost constraints currently in place.  I have a lot of criticism for the current system, but very little is being changed.  The fundamentals still point to health care increases leading to a huge problems down the line, with many people still unable to get the healthcare at reasonable costs.  Neither party is looking to make real changes, they just jockey to please their voting blocks.  Best bet is to try and keep yourself healthy.

Parizade

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Re: Healthcare in Early Retirement?
« Reply #10 on: March 18, 2012, 05:52:57 AM »
Christians have the option of MediShare. It's very inexpensive because they won't reimburse costs for self-inflicted illnesses and won't even let you join if you smoke. And they've been doing a fine job for many years so they are well established as trustworthy.

http://mychristiancare.org/medi-share/

TLV

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Re: Healthcare in Early Retirement?
« Reply #11 on: March 19, 2012, 01:31:35 PM »
That's an interesting option, Parizade. A healthcare coop like that would definitely be worth considering once I leave the cushy benefits of my job. Unfortunately for me, I find that particular group's required "Statement of Faith" too restrictive for me, even though I consider myself a Christian.

Perhaps some day Mustachianism will be big enough to have its own healthcare coop - instead of excluding based on a statement of faith, it could exclude treatment for injuries due to getting punched in the face for un-Mustachian behavior ;)