Most of us cannot conceive of what it means to become either chronically ill or disabled.
I know I couldn’t.
But the fact is that many of us will become chronically ill and roughly one out of thirty of us will become disabled. Some will experience chronic illness or disability indirectly through a child, spouse or loved one. Whether we’re talking about cancer, stroke, multiple-sclerosis, a spinal cord injury or a host of other maladies, sudden and profound – dare I say tragic – life changes lie in wait for many of us.
This inability to conceive of such things happening in our own lives is why Health Savings Accounts, High Risk Pools, age-based tax reimbursements and sub-par insurance plans can be viewed as viable aspects of American healthcare.
In effect, politicians take advantage of the “that could never happen to me” aspect of human bias to sell these absurdly bad ideas to a naive electorate. Allow me to explain a bit more by explaining my situation.
I earned a PhD many years ago in a field called Materials Science and Engineering. Think of it as a modernized metallurgy degree. I worked at both NASA and the National Institue of Standards and Technology in my earlier years before entering industry. Since those years, I’ve been a Vice President, a President, an owner, a CEO and a Chairman of various companies. Along the way, I won Ohio’s “Exporter of the Year” award and sold my company for enough money that my wife and I had a nice retirement nest egg waiting for us.
One might say I’ve been successful.
Then, one beautiful September evening, a reckless driver took my legs.
I was riding my bike, as I often did, with three blinking lights (one on the front and two on the back) in the waning daylight when a driver made an “improper left turn” and broke my spine in five places. As a result, I was left paralyzed from my chest down. The driver had state-minimum insurance ($25,000) and no assets, but, fortunately, I had good health insurance through my employer. Thanks to that insurance, much of my expenses from my injuries have been covered so far (there are a great many things they rejected and some ridiculous limits for things like physical therapy, but that’s a story for another day).
The problem, however, is that a spinal cord injury (SCI) is a life-long, ongoing expense. The total cost of a spinal cord injury can easily surpass $2 million over a person’s lifetime. This is fine if one has health insurance for the entirety of that lifetime, but that’s not an easy feat. In my case, I lost my job because of my paralysis. With that job loss, I also lost my health insurance. I have COBRA for now, but, once that runs out, I have no good options on my horizon now that the ACA, aka Obamacare, is being put to pasture.
So, with that as the backstory, let’s take a look at the latest elements of post-ACA healthcare.
Sub-par Health Insurance Plans
One of the elements of the ACA was a minimum quality standard in health insurance plans. Basically, all health insurance was required to cover healthcare costs at government defined minimum level. For instance, all plans had to cover preventive measures, such as vaccines and annual physical examinations as well as at least twenty rehabilitative, physical therapy sessions per year.
To reduce costs, the latest proposals from our politicians eliminates these minimums. The idea being that we should have the freedom to purchase policies that are largely of no value whatsoever if that is what we choose to do. The problem with this concept is that it presupposes that each of us has even a marginal clue about what we might need in the future for our healthcare needs. This is ludicrous.
Take, for example, that 20 rehabilitative, physical therapy sessions minimum that the ACA included. Seems like a reasonable number, right? Up until 2015 when I thought about rehab physical therapy I thought about recovering from my shoulder surgery or my mom rehabbing after a knee replacement surgery.
But that’s because I, like most people, never thought of my own healthcare in terms of chronic illness or disability. In that context, 20 sessions is entirely inadequate.
For example, every year, more than 795,000 people in the United States have a stroke. Of those who survive a stroke many will suffer substantial functional loss owing to brain damage. This can manifest as paralysis or even the loss of the ability to speak. The great news for stroke survivors, however, is that much of the damage done by a stroke can be undone through a process called neuroplasticity whereby trained therapists help the patient “relearn” movement and language by essentially training the brain to use an undamaged area to perform the function of the damaged part of the brain.
This cannot be done in 20 visits per year.
Likewise, for those of us suffering from MS or spinal cord injuries, etc., improving our function or slowing degenerative effects can require therapy several times per week.
There are many other problems with “low-end” health insurance policies. Newer drugs, expensive surgeries, emergency room visits, etc., are all things that can simply be unavailable under these limited, value plans.
Age-based Tax Reimbursements
I’m hopeful that this doesn’t require much explanation. Our politicians want to change how the government assists people in affording private health insurance. Under the ACA people could get subsidies based on their income with the lower-earning families receiving the largest subsidies such that health insurance was essentially free for the poorest families in our country.
The new replacement proposes to replace subsidies with tax credits and seeks to define the amount of that tax credit based on the age of the taxpayer, not that person’s income.
I don’t see how anyone pushes this idea with a straight face. A very wealthy 70-year-old would receive more “assistance” than an unemployed, 22-year-old left disabled by a car crash. In fact, that unemployed, disabled 22-year-old would get nothing because she wouldn’t owe any income tax to begin with so a tax credit is meaningless.
Health Savings Accounts
The concept of a Health Savings Account is simple. One elects to have a portion of their paycheck distributed to a special savings account that is tax free and reserved to cover future medical expenses. When one later becomes ill and needs to see a doctor or buy medicine, they use these untaxed funds to cover those expenses. This, according to some politicians, gives them “freedom” and control over their own healthcare because, unrestricted by a cumbersome insurance plan, they can shop around and find the best deals to get the most value for their money. For lesser injuries or illnesses, they can opt to forego medical treatment entirely and keep that money for later.
Here’s where this breaks down: nobody who isn’t a multi-millionaire can afford to cover the costs of chronic illness or disability with any type of savings account.
Obviously it’s too late for me to put money into a health savings account. But let’s pretend that I had been able to do this. Let’s also pretend I started doing this when I finished graduate school because I certainly didn’t have money to spare while I was earning my degrees. That scenario would mean that I could have saved money every year since 1996 so about 20 years of savings.
For me to cover that $2 million lifetime expense without insurance I would need to have saved $100,000 per year.
Yes, only a mere $100,000 per year to save up for a disability. And that only covers the medical costs. I’d still need food, clothing and a place to live.
High Risk Insurance Pools
The politician’s answer to this dilemma is “high risk pools.” The idea here is that you group the elderly, chronically ill and disabled into insurance plans that are partially subsidized through the government through tax credits or subsidies. The mere concept defies logic since the whole purpose of a “risk pool” is to offset those unfortunate enough to become ill or injured with others who are fortunate enough to remain healthy. If you create a “risk pool” where every member is already unfortunate, you have extremely high costs and likely low to no income with which to pay for insurance. Essentially, high risk pools become a smokescreen for letting these people die broke and without care.
The fact remains that the entire purpose of health insurance is to hedge our bets in case we or our family members become very sick, chronically ill or disabled. Cynical politicians play on our selfishness to cast these sick and injured people as some sort of drain causing higher costs for healthy people which is, in fact, true. But what they leave out is that any one of us can become “one of those” people in an instant. A car crash, a diagnosis of multiple sclerosis, a stroke is all it takes.
If you or a loved one suffers such a tragedy, do you really think they should be pushed into high risk pools where they cannot afford insurance and wind up going without care? Because that what these approaches are asking you to do. They’re counting on that human inability to imagine something like this happening to us.
Don’t let them fool you.
The fact remains that our healthcare system has two intractable problems: high costs and an insurance industry that adds no value. The two problems feed off each other. Neither can be fixed alone, but, interestingly, there’s reason to believe that addressing the no-value-added insurance piece will result in much lower costs.
So, tune in next time when I apply Kaizen “value-stream mapping” to health insurance so I can show you exactly how useless and wasteful private health insurance truly is.