Investment Workshop 36: Obamacare Repeal 3

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Wanderer

The Wanderer retired from his engineering job at a major Silicon Valley semiconductor company at the age of 33. He now travels the world, seeking out knowledge from other wealthy people, so that he can teach people how to become Financially Independent themselves.
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Hello again and welcome back to the Millennial Revolution Investment Workshop! New readers, please click here to start from the beginning.

In what appears to be a never-ending cycle, the Republican effort to repeal and replace Obamacare continues to careen from news story to news story. If you were to try to keep up in the day-to-day negotiations, back-room dealings and press briefings, you’d probably go nuts. Fortunately, you don’t have to since I did it, and JOKES ON THEM, I’m already nuts so no (further) damage done.

Why Is This So Important?

To recap, if you’re reading from Canada, Australia, the UK, or much of Europe, none of this shit applies to you and you should thank your lucky stars it doesn’t. You guys all have gold-plated government-backed universal health care coverage, so you don’t have to worry about it either before or after retirement.

But if you’re American, what happens to Obamacare is HUGELY important because you’re going to need it if you plan to retire. In pre-Obamacare America, your health insurance was tied to your job, so if you didn’t have a job you didn’t have health insurance. Obamacare changed all that in 2010 by providing federal subsidies that were tied to your income to help pay for insurance premiums bought on the Obamacare exchanges.

And those premiums were costly. In 2016, the average cost of insurance premiums for a family in the US was $833 a month, or $10k a year. That additional continuing expenditure increases your retirement portfolio (as per the 4% rule) by $10k x 25 = $250k! So Obamacare makes a HUGE difference to your financial ability to retire early.

And when Trump got elected on a platform to repeal the ACA, with the presidency, the Senate, and the House all solidly in Republican hands, we thought all that was toast.

Where We Are Now

As it turns out, the road to repeal-and-replace was a lot harder than anyone thought.

Shortly after Trump took office, Republican members of the House promptly got into idealogical fights with each other, with the moderate faction of the party saying “Hey, let’s maybe not throw people off of health insurance,” and the hard-right Freedom Caucus demanding to, from what I can gather, throw as many people off of health insurance as possible. This memorably led to the repeal effort tanking, then failing, leading House leader Paul Ryan to declare “Obamacare is the law of the land for the forseeable future” in May.

And then, out of nowhere, they manage to squeak the bill through the House by a single vote. Fantastic.

The bill went onto the Senate who then promptly…ignored it completely and started drafting their own bill.

Okie dokie. With me so far?

What they came up with is called the Better Care Reconciliation Act, or BCRA. And the Senate’s reputation for being a more moderate body than the House was put on display. I’m not going to get into the nitty-gritty details of the bill, but in broad strokes the Senate’s version:

  • Eliminated the Individual Mandate which Conservatives haaaaaated, but replaced it with penalties if you tried to dump your coverage and then sign up when you get sick. Fine. Call it whatever you want, it’s still a penalty for dropping your coverage.
  • Kept the ban on dropping people’s coverage due to pre-existing conditions. This was huge, because this was the biggest fix to the insurance markets Obamacare enacted, and this bill preserved that.
  • Kept the Federal subsidies that helped pay for insurance premiums. Again, this was the other big plank of Obamacare that made it useable for early retirees, so that’s a pleasant surprise.
  • Eliminated the Obamacare taxes on the wealthy. So…they’re keeping the federal subsidies, and giving a tax break to the wealthy? How are they going to pay for that?
  • Cutting the ever-loving shit out of Medicaid. Ah. There it is.

So in broad strokes, the BCRA kept the core facets of Obamacare in place that early retirees care the most about, namely the pre-existing condition ban and the income-based Federal subsidies. It fucks over poor and disabled people, but that’s not exactly surprising given a Republican government.

Enter the Cruz

But the Senate faced the same issue that the House did: delicately threading the needle and trying to appease just enough moderate and hard-right Senators to get to 50 votes. With a 52-vote majority, they could only stand to lose 2 votes, so it was a tough sell.

Senator Cruz then introduced his Cruz Amendment, which was an attempt to drastically lower premiums for healthy people.

The crux of the change is this: If an insurance carrier in a state offers at least one plan that complies with the current Obamacare regulations, it can offer other plans that don’t.

PolitiFact Sheet: Understanding Ted Cruz’s health care amendment and pre-existing conditions

The idea behind this was insurers could offer a high-deductible catastrophic plan that only kicked in if you got a really expensive-to-treat disease. This way, if you were relatively healthy you could just pay for your own care out of pocket (or via an HSA), and your premiums would be super low, but if you wanted to keep your Obamacare-compliant plan, you could.

On the surface, this seems to be the best of both worlds. Healthier people could pick a cheaper plan, everyone else would keep their existing one. Except according to insurance industry analysts what this would do is bifurcate the insurance market, crowding all the healthy people to one side and causing premiums to skyrocket on the other. But even then, from an early retiree perspective, this would have been OK since the Cruz Amendment would have kept the Federal subsidies intact. Your premiums would go up, but the government would pay for them, so who cares?

And it’s Dead

This is where the Obamacare repeal effort stood on Monday, when I sat down to write this article. There were clear winners (rich people) and clear losers (Medicaid recipients) with this solution, but it seemed that from the FIRE community’s perspective, we actually had a workable solution.

And then the Republicans abruptly killed it.

President Donald Trump’s top legislative priority was dealt a potentially fatal blow Monday night as two more Republican senators announced their opposition to the party’s health care overhaul.

“Regretfully, it is now apparent that the effort to repeal and immediately replace the failure of Obamacare will not be successful,” McConnell said.

GOP health care bill collapses

So NOW it looks like Obamacare is here to stay after all. Again.

I’m a little cautious in declaring the issue over and resolved with, as I’ve done that before only to be spectacularly wrong, but right now, as it stands, health care for early retirees just might be OK.

UPDATE: Aw, for FUCK’S Sake!

Oh for crying out…

On Tuesday, Senate Republicans have now announced that they’re planning on a straight repeal WITHOUT a replacement.

Senate Majority Leader Mitch McConnell on Monday night abruptly called for a vote to repeal Obamacare without an immediate replacement after the latest Republican effort to overhaul the U.S. health-care system fizzled out.

-GOP gives up on replacing Obamacare now: McConnell and Trump call for simply repealing

Well, that’s…not good.

A straight repeal with no replacement would be a disaster for everyone, early retirees included. It also directly violates a campaign pledge not to deliberately blow up the insurance markets without a firm replacement, but I guess that’s out the window now. We’ll keep monitoring the situation, but everything just went from “Maybe we’ll all be OK,” to “WELP, everyone’s fucked” in a matter of a day.

UPDATE 2: Aaaaand it’s Dead Again

And JUST as I was about to hit publish, now this happens.

Senators Susan Collins of Maine, Shelley Moore Capito of West Virginia and Lisa Murkowski of Alaska, all Republicans, immediately declared they could not vote to repeal the Affordable Care Act without a replacement — enough to doom the effort before it could get any momentum.

‘Plan C’ on Obamacare, Repeal Now and Replace Later, Has Collapsed

That’s 3 “No” votes in the Senate, and they can only afford to lose 2. So there goes the Straight Repeal option.

Leave it to me to pick today to say “You know, the Obamacare Repeal effort seems to have stabilized. I think I’ll write an update post.”

NOPE.

I seem to have picked the worst day to talk about Obamacare Repeal because it seems to be changing by the hour. First, it looked like it was going to be OK, then everyone was screwed, and now it looks like Obamacare is back to “here-to-stay” status.

Well, I don’t know about you, but I’m getting whiplash over here. What do y’all think is going to happen to Obamacare in the end?

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36 thoughts on “Investment Workshop 36: Obamacare Repeal 3”

  1. The “rich” hate it? How about working people here in US that are tired of being taxed to death. We now have this additional ACA income tax if you are “rich”, in addition to high federal taxes, high state taxes (Im in CA, and >10%), not including FICA or my employers match of such (which IMHO will not be present when its my time or will be means tested away because I dared to be responsible and save instead of opting for consumption), sales tax close to 10%, gas taxes, and if you are “fortunate” enough to live in a place like SF, you have city taxes, and this doesn’t even include a host of other taxes. So at what point does a person say enough? How much more than 50% of your pay check are you willing to give? Many people here have had it. Its not that they like Trump, but they have had it with government over reach and incompetence heaved on their backs. Why would we want our incompetent government taking even more responsibility? They can hardly do what they have now, and do that extremely wastefully. No thanks. Keep your government hands off my life and my life will be better. Maybe in Canada you have competent government but here, we are sick of ours and its waste and have had it. I follow your blog, love the FI movement, but this rage against the “rich” is just BS. Its getting to the point here people are going to start “going curry cracker” and prefer leisure over labor and just bail from working to escape paying taxes into such a corrupt system.

    1. The nice thing about the FI movement is that it allows those who are opposed to simply relocate, just like businesses did to escape taxes in the US. I think the Go Curry Cracker team may be on to something.

    2. I’m not quite sure were you are picking up this ‘rage against the rich’ in this post. If anything, people making over $250K are considered the 1% and honestly are not taxed enough – making us joe-six-packs pick up the slack, so I certainly share your frustration there. As far as incompetence, the Republicans have had majorities in the house, senate, and majority of governorships since 2010 – time for an overhaul there. They’re so used to dragging their feet and being the party of opposition that they have no clue how to actually govern.

      Also, you happen to live in the wealthiest state in the union. If CA was it’s own country, it would be the 5th wealthiest nation just above France and India. Since you’ve deemed yourself so responsible as to save your money, why don’t you take your hard earned dollars and move to a state that has no income tax? What is keeping you in the taxpayers hell that is California?

      1. So Im curious, at what tax rate should “the rich” be taxed? Please give a specific number and at the same time, please give a tax rate that others (not the rich) should be taxed at.

        1. Use the Buffett rule. I would start with 30% of all income, whether earned or capital gains. I am in the lowly 15% bracket, but I also pay 7.65% FICA and company pays the same for me. That’s 30%. Adjust rich taxes up from there as needed.

          Right now, the truly rich only pay 15%. Not nearly enough.

    3. TRUE! We are really the land of the fee home of the slave. In a free country you should have choice . We can’t fund the programs we have now. This is going to be bad, Soc . Sec. has made the news as not being viable in the future . Obama tried to pass something to the effect of not giving the military retirement and blending 401k and gov. retirements in soc. sec. I think it dropped like a lead balloon . But the fact that He put it out there got people thinking . the teamsters can’t pay pensions , city’s and states are going bankrupt, what does that tell you? This isn’t a right or left thing this is math as you say. Both parties and our federal reserve have done this to us as well as voters past and present

    4. I raged against the rich? When?
      I think you might be projecting a bit here. It may seem that because I’m pro-Obamacare that I’m therefore a card-carrying Democrat, but I have no idealogical position on US politics. Obamacare helps Americans readers of this blog who are trying to retire early. That’s the only reason I care.

  2. I think the Affordable Care Act will be here to stay for now.

    It has become obvious the replace part of the repeal and replace equation is not attainable for the Republicans. Republicans tried multiple times during Obama’s presidency to repeal and never succeeded. I doubt Republicans will be able to accomplish a repeal alone even now with the majority. I don’t think this is the last will hear of this, but it is the end for now. I could see Republicans trying a year or two from now when new representatives and senators enter, or when the angry mango is kicked out of office and we have a new POTUS…whichever comes first.

  3. I’ll stick with my summary of the ACA repeal/replace/whatever: who the fuck knows. Certainly not those 100 senators in Washington! Not Donald Trump!

    The odds of an ACA repeal look slim to none at this point, and even if there is a repeal/replace it’ll look kinda like ACA-lite (aka more expensive for crappier coverage). The several versions I saw didn’t make substantial changes till 2020 anyway. I haven’t changed any of my plans so far, and it looks smart in hindsight since no one on the right can get their $hit together to pass anything that’s better than ACA.

      1. I don’t think so but maybe. The kids are on medicaid for kids, which is separate from the medicaid expansion that adults qualify for in many states (not including North Carolina). So I think since North Carolina never expanded medicaid, we will have the exact same medicaid setup as we do now. However medicaid is a complicated beast and I admit I know very little about it, other than it provides 100% coverage starting with the first dollar so we never owe anything when we visit the doc or dentist or pharmacy.

  4. The ACA (Obamacare) is unsustainable will collapse under it’s own weight. The GOP’s bill as proposed suffered from the same flaws. Why does anyone think that the best way to define how an industry should work is to let a small group of politicians in Washington legislate it? That’s not how any of our other industries work (real estate, electronics, clothing, food, software, automobiles, etc.). People often claim healthcare is different. It is not. Even within the healthcare industry the veterinarian and cosmetic surgery sectors have experienced what all free markets experience: continued technological advancements while costs continue to drop. Get the government out of healthcare and let free people make decisions on what they want. It’s worked for literally every other industry in the country.

    1. Sigh. I don’t know why this belief seems to be so prevalent in the USA, but health care does NOT work like every other for-profit industry in the world because in health care, the customer does not have the option of walking away.

      If all car companies banded together and charged $1M for each car, customers would say “nope” and go back to biking. The ability to walk away gives the customer power to keep prices in check. Your examples of vet and cosmetic surgery actually do have this property (you can walk away if the price is unreasonable), and that’s why it works for those industries.

      But health care breaks this core assumption of a free market. When you get sick, you can’t choose to not seek treatment. That’s why free markets don’t work for health care.

      1. Not true at all. What about food and housing? For both the consumer does not have the choice to walk away. What if food (arguably more essential than healthcare) were not allowed to run like a free market and instead were run like the ACA? The government would dictate what food had to be supplied and in what quantities. I would have to pay for food I neither needed nor wanted. Let’s say I was vegetarian, my food premiums would be required by law to include the cost for meat, even if I don’t want it (like in the ACA with maternity costs, mental health services, etc., I have to have it). And if I complained I would be told that I need to pay for it otherwise if I didn’t contribute to the system then others wouldn’t be able to get meat. In a politically designed food system, would I have the incredible flexibility of choice from gluten free, organic, free range on the healthy side to a double bacon cheeseburger? I don’t think so. It limits choice, and more importantly innovation. I am a US citizen and retired early 4 years ago at 39. After spending 3 years sailing I am back in the US and facing a broken health system. As an early retiree I would much rather pay for catastrophic insurance only and self insure for any and all smaller items. I view that as a way superior option (being allowed to choose what I want like an adult) than being forced to pay for services I don’t want or need. And even if I get subsidies, should I? Is that a “good” system?

        I like your blog and have pointed others to it. I think what you are doing is great and want more people to reach early retirement and I think you are helping. That being said be careful not to let your financial success make you overconfident that your political beliefs are always correct. I was tempted to take your “Sigh” at the beginning of your post as condescending toward another perspective on this issue. I get tempted to have similar feelings when I hear people pushing for government (which in our case is slow, ineffective and often causes more harm than good) to solve our problems. And they do this while at the same time using their iPhones (result of free markets), eating their gluten free, organic food (result of free market), and having anything in the world delivered to them by Amazon (result of free market) and then question whether or not the free market could handle something as complex as Healthcare. “Because it’s different”. It’s not. Then again I could be wrong, which is why I suppress the condescending feelings and try to understand another’s perspective.

  5. I hate the healthcare in the country. It’s awful, it’s complicated. I’ve been dealing with an accident for almost a year, and they can’t even get the billing right. This reminds me I have to call them to see what is going on with the claims.

    The fundamental question that no one wants to answer in the US is:

    Is healthcare a right or a privilege?

    If it’s a right, then let the state run it and everyone chips in and the government sets the procedures that are covered, anything else is elective. Perfect? No.

    If it’s a privilege, then let everyone that can afford insurance pay for it. Everyone else is left to pay for healthcare out of pocket, and if you can’t afford it sorry, you don’t get it. Much like every other privilege, I want a Ferrari, but I can’t afford it, so I don’t have one.

    Wanderer – Just be thankful you don’t have to deal with this disaster.

  6. Dear Americans,

    You know that Canadians pay way more in taxes, especially the higher income earners, right? You guys have lower income, capital gains/dividends, consumer taxes. You also make more (for most equivalent jobs, plus there’s the higher dollar). Most consumer goods are cheaper in the US, even after taking exchange rate into account. We don’t get to deduct our mortgage. Our major cities where most of the jobs are are insanely expensive. We’ve got a higher minimum wage and health care, and while they are great, please remember we pay for them.

    Sincerely,
    Your neighbour to the north

      1. You know, I thought that too but after doing so many reader cases I’ve noticed that your tax rates (when taking city/state taxes into account) don’t seem to be that different from what I paid as a Canadian when I was working.

        So…if you’re paying similar taxes…where the Hell is it all going?

    1. Much of the taxation by death is vastly overestimated by Americans. They’re far from taxed to death. Canadians have more regulation, and much of the day-to-day risk of living is taken out of the equation. Standardizing healthcare is where you’ll get efficiencies. That’s the biggest benefit of things like ObamaCare. Limiting what companies can charge leads to those companies being less wasteful, demanding lower costs from other companies. It INCREASES efficiencies. As health care isn’t really an OPTION when you’re sick, it doesn’t make sense to throw it to the market, as the market is really good at taking advantage of a situation and increasing the price.

      Supply and Demand Pricing doesn’t really work when it’s a mandatory purchase… we put an extremely high value on life, so there really is NO price ceiling.

      If you can extend life for another year you don’t care how much it is going to cost… People don’t really do a cost/benefits analysis when deciding if they should buy some medicine.

      A BIG BENEFIT of standardized health care is that you have more efficiency, not less.

      I’m not saying Canada has a great system, it doesn’t. Wait times are a problem and service from medical professionals is lower, due to the perception that it’s FREE… so expectations seem lower. Emergency service is really great though.

      If you want to REALLY see how a medical system is run, go to Japan. Mandatory health premiums that you co-pay… but when you see the prices you actually pay you’d laugh. Even covers dental.

      Eye surgery for cataracts? $1000.

      Seriously, they have a GREAT system that straddles what the USA and what other countries do (like Canada)

      1. Couple of quick offsetting points:

        “Limiting what companies can charge leads to those companies being less wasteful, demanding lower costs from other companies.” – Please do a quick search on Price Controls. You will find that the overwhelming consensus of economists and economic history is that they do not work and often exacerbate the problem they were trying to solve. Also retail titans like Walmart and Costco who are notorious for demanding low costs from suppliers and providing low costs to consumers did not achieve this through government price controls.

        “as the market is really good at taking advantage of a situation and increasing the price” – If there is one thing that properly functioning free markets are good at, it is reducing prices. Profit motive attracts competitors and increased competition drives down price. Micro economics 101.

        “Supply and Demand Pricing doesn’t really work when it’s a mandatory purchase” – Please look up inelastic demand, the economic name for this issue. It has been studied in detail and does in fact work via Supply and Demand, as all things do. Supply and Demand are like gravity, you can try and ignore it or legislate around it, but it still and always will exist.

        “A BIG BENEFIT of standardized health care is that you have more efficiency, not less.” – There are benefits to standardized and nationalized healthcare, but efficiency is definitely not one of them. Would be interested in seeing a study that shows this.

  7. There are a number of things about the repeal of Obamacare that are problematic. A few thoughts: 1) I don’t think this is a rage against the rich. And even if it was it is a legitimate conversation. What should our role as a society be? And government healthcare (e.g. Medicare) is actually well-run. It’s fraud rate is much lower than other health care plans. Besides the health care we do get is too expensive and isn’t necessarily that good compared to other places; 2) Obamacare isn’t necessarily collapsing. In the long-run changes need to be made and we will have to make some decisions on taxes for subsidies and the like, but that is true of other programs. We will eventually have to make some hard choices on social security and the like. 3) Obamacare isn’t going anywhere. Next week there will be a procedural vote to repeal but that is nothing but a political get you on the record. It is possible that some bipartisanship could come out of it. At least that is what I tell my students. Finally, and to get political I think Obamacare or some version is going to become even more entrenched. More and more companies are going to the gig economy. 44 million Americans have a side hustle and I think more companies will treat their employees as 1099 contractors. So the companies get rid of the benefit, but we are going to need health insurance so having something that is portable will be necessary. That will either be from private insurance, public (e.g. single payer) or both. BTW, Obamacare is nothing but insurance is doesn’t curb the cost of healthcare per se, but gives one more access. The cost of healthcare debate is a related but separate issue. If we want to curb healthcare costs there are lots of ways to do it, but some are politically untenable (e.g. allowing for the importation of drugs or creating uniformity among billing codes for insurance companies. When you spend 800 billion dollars on paperwork that is frickin ridiculous). Sorry for the long response.

  8. Great post summing up what’s happened with healthcare. If we could figure out a way to make Obamacare less expensive, I think we would solve the main problem with healthcare in the US. Beyond that, we should be holding hospitals and doctors accountable for the work they do and the treatment they give. Focusing on the total cost of care and clinical outcomes is the next huge step for the healthcare industry and has the opportunity to drive costs wayyyy down.

  9. For those who defend the “free healthcare” for everyone, remember: it’s not the government who is paying for your insurance, it’s me, you and every taxpayer. There is no such thing as public Money, government Money… it’s our Money.
    It surprises me that in a FI blog people still think that the government can make better decisions for your Money than yourself. My Money, my life, my decisions.

    Everything given for “free” generates infinite demand, since everybody will want it. The problem is, the supply is not infinite because it’s not really free, we are paying through taxes and our taxes aren’t infinite. It creates scarcity.
    This phenomenom can be seen in every sector, including healthcare.
    One example is the big wait for surgery in Canada, where many people (who can afford) go to USA to have their surgerys faster.

    The more regulate, less liberty, more expensive, less quality

    1. But liberty for whom? The whole idea of health care is that it takes the uncertainty out of life. It allows equal opportunity despite the genetics you were born with, or the parents that raised you.

      It’s not a question of who makes the decision, it’s whether we accept the burden of a collective and whether or not we value life of every person as more valuable or not. Remember that ultimate freedom means anarchy. There are places that have FAR more freedom than the USA… Freedom obey the laws or not, freedom to choose whatever lane of traffic you wish to travel in. Freedom to not be unencumbered by the laws of the land.

      The inequality of health care also limits freedom, does it not? Whether or not healthcare is a shared social burden bears little on your freedom… and healthcare isn’t a commodity and so logically cannot have infinite demand. You don’t apply healthcare to those that are not sick. You’re not talking about making Corn Flakes free… or even cosmetic surgery.

      People don’t deliberately go out of their way to get sick, break their own legs, or inject themselves with ebola so that they can the most use out of health care… so sharing the cost of healthcare ( making it seem free ) does NOT mean there will be infinite demand.

      It’s a safety net when something tragic DOES happen. IT’s a cushion that allows people of all walks of life to have the FREEDOM to live their lives. It gives equality to all people and sends a message to all citizens that their life matters. FREEDOM to quit their job and become an entrepreneur… FREEDOM to take an opportunity at another job without weighing the costs of medical care going up or down depending on your new occupation.

      As for wait times, the system isn’t perfect. I personally would rather see those that could afford it to co-pay for surgery. However, MOST of the wait times are for elective surgery. Emergency surgery and serious surgeries have either no or very short wait times.

      While it’s true that you don’t have the choice to speed up that process, you have to take the warts with the rest.

      Quality of care DOES not necessarily result from less regulation. In fact, the lack of regulation means that those who are desperate for aid can more easily be fleeced for cash. This can lead to bloated, inefficient, processes. It’s widely known that the US medical system is expensive… but is it because of superior quality, or is it because of inefficiencies and price gouging?

      Medical quality CAN be great, but it can also be spotty. More money is definitely pumped into the system as people in general are paying more… but it’s not automatically more efficient. In many cases, it really just depends on where you live.

    2. Correct, we do have famously long surgery wait times, but those are for elective, non-life-threatening surgeries. Non-electives are fast.

      Actually, that’s a good point you raised. For elective health care that’s not life-threatening, free market actually functions pretty well. That’s why we go to the States for those. But for non-elective stuff, free market breaks down. That’s why we stay in Canada for those.

      So in a way, if you guys stay with your private health care system, Canadians actually benefit since we get the best of both worlds by crossing the border and taking advantage of your system when it benefits us. But you can’t do the same to us 🙂

      1. I respect both of your opinion and I’m not from Canada, so I can’t speak for you and your reality, but I can speak for mine. So I have to agree when you say “it really just depends on where you live”.
        I’m from Brazil and lived for a period of time in the USA, so these are the systems I know.

        In Brazil we have free health care and it couldn’t be more inefficient, it’s completely broken, maybe in Canada it works but here, definetely not. You would be surprise by how it CAN create infinite demand here, it’s really impressive how people (specially the less instructed ones) go to emergency rooms for a ingrown toenail. It makes the hospitals full of people that didn’t have the need to be there. More money to this system just means more money thrown away. Maybe all of these problems are because of the poor education most people receive here.

        But nobody wnats to depend on this system, so families who have a little more money pay for it twice, one from (huge) taxes and another from private health insurance, which is increasing the prices veeeery fast, because of all the regulations the government creates everyday, they force the insurance companies to cover for so many things that it becomes unsustainable.
        I have to pay in my insurance for obstetrician coverage just because I’m female and fertile age, it doesn’t matter if I don’t want or can’t have children, I don’t have a choice… This is what I meant when I said that more regulations makes it more expensive and with less liberty.

        I didn’t mean to be rude or anything, I love this blog 😀 It’s just the way I see things from my reality.

  10. Thanks for the solid summary. This is the only piece of FIRE that gives me heartburn, since we live in the States. I have plenty of time for them to figure it out though…

  11. With respect to the whole “a functional health care system means more taxes,” it’s mostly not the case.

    Americans already pay ~90% of what most countries with functional universal health care spend per capita in taxes. It’s just instead of going towards a single health care system, it gets split up amongst Medicare, Medicaid, the VA system, various grants, etc.

    Combined with what we pay in taxes and what Americans (corporate and individual) pay privately for health care, we already spend something like 180% of what universal health care should cost us per capita.

    If we managed to bring per capita health care spending down to what socialist hellholes like Australia, Costa Rica, Germany, the UK, Canada, etc pay, we’d have to hike federal taxes probably about 5%, but you wouldn’t have to pay anything for health care (and neither would your employer, freeing up more cash to hire more people, spend on capital investments, distribute to shareholders, whatever).

    We would have to figure out how to transition the people who make a living pissing away 9% of our GDP to new jobs that actually produce something of value, and that would not be trivial.

  12. Government usually makes a mess of things. Look at the 3 things that they campaign on all the time – medical care, education and housing. The more they touch, the more expensive things get. Is it coincidence or is it incompetence?

    1. Exactly. How is the VA working out? (hint, look at the news reports over the last few years). I have a friend that just went onto Medicare – she talks about what a nightmare it is and how its impossible to find a doctor who will accept it – and why should they? Housing, same. Fed school loans? just emboldens schools to raise prices. And why shouldn’t they?

      1. Wanderer, maybe you should build a bigger cushion for us poor Americans FIREs to buy health insurance. The endless tinkering by our political parties would mean non-stop price increases that are independent of whatever crazy COLA formula.

  13. Thanks for the great summary! Although, we reached FI 4 years ago at age 49 we did not retire because of the healthcare. Cost increases every year. We wanted to retire at 55 to receive the company healthcare since we did not know if Obamacare would be around. My wife was laid off last year after 30 years of service. She gets a 52K pension and 8K yearly for the company Aetna healthcare plan. In 2016, it cost 11K for Aetna for retirees which is 3K (11K-8K) out of pocket for my wife plus 1.6K for deductable. In 2017, it cost 12.5K for Aetna and it is 4.5K (12.5K-8K) for my wife plus deductable. These are affordable prices because the company offsets 8K. I can’t imagine paying full price of 25K-30K for a couple.

    I can financially walk out and be fine but I would hate paying all that medical cost greater than 12.5K plus a deductable on my own for the next 12 years until age 65 for medicare. If I work 2.2 more years to reach 55 then I would double my pension to 70K and get 8K yearly for medical. Since I can’t trust the gov’t to reduce the cost of healthcare, I will need to grind it out another 2.2 years and go for the company medical plan. This is my golden handcuffs.

    Adam

  14. For everyone in the Commonwealth, just remember that the US Senate does not work like your senate, or house of lords, etc. If our system were in Canada, the Maritimes would get twice the votes of Ontario and Quebec together. The empty red neck states get a really big vote, while the more cosmopolitan coastal cities get the shaft.

    Guess where I live?

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