Healthcare: what you do need to do

Donald Trump promised today that there will be “healthcare for everyone” after repeal of the ACA.ben_franklin

He can actually do that very easily and cheaply, by cutting back the healthcare provided to “catastrophic” coverage.  This category of plan exists today, but almost no one actively sells it because if provides very little value to the consumer.

Currently, these plans are for people who are under age 30 and those who have hardship exemptions from the ACA requirement for having health insurance coverage.  The plans are required to provide coverage for up to 3 visits with a primary care physician and 5 other basic services.  The plans have very high deductibles — $6,850 currently — and the consumer is responsible for 100% of all other charges before the plan will contribute anything.  On the plus side, these plans are cheap, costing less than $50 per month.  That’s because so few people actually get any benefit from them.

Thus, to take care of yourself, you need to have $6,850 or more in ready cash or a rich relative who’s willing to spot you the money.  With a family, you need more.  If your health goes south, using home equity to pay these expenses puts you at risk of losing your home.  Using other credit could put you at risk for bankruptcy.  (Medical bills remain the leading cause of bankruptcy in the US.)

Several analysts have indicated that the trend for both general healthcare and Medicare will be for the government to pay for less and consumers to pick up the bill for more.  The idea that the ACA will be replaced by more limited coverage fits with this trend.

What you need to do:  Stop spending and save your cash.  You’re going to need it, one way or another.  This applies to everyone, including those on Medicare.  The goal should be a “war chest” the equivalent of at least six months of income — and a lot more if you have kids.  You need to build that as quickly as possible.  If it sounds daunting, it can be done.  As Churchill said about the need to work with Stalin in WWII, “you can walk with the devil until you get over the bridge.”

Unfortunately, if enough people follow this advice, we will slide right back into a recession — which is another reason for growing that war chest.

Ben Franklin was right:  “a penny saved really is a penny earned.”



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