Thoughts on the passage of the health care bill?

[ucodegen]

I’m fortunate that, until this year, my employer was pretty generous in how much they covered. I did not count the employer contribution since that was NOT out of my pocket.

I found that including employer contrib really did change the numbers, as well as the rate you applied for internal rate of return (I ran it both ways)

This isn’t the first time I’ve done your exercise… When high deductable HSA plans were rolled out a few years ago I started doing this every year. So far, it doesn’t make sense… but being an anal engineer – I’ll keep doing the math every year.

As do I.. for me, it didn’t pencil out. I do have to start watching for colon polyps soon because one side of the family had colon cancer, though it could also have been their nutritional behavior too.

Good for you for saving >$700k, but it’s not useful for public policy. Maybe 1% of the country could practically save $250k to self-insure a family, and it would take them a decade to get there. And once they got there, would they even notice the cost of a high-deductible policy?

Why deny the ability to pay direct to those that can and/or have the discipline to save up enough to do this? You also have to realize that for most people, they will never have anything near this cost. Insurance reduces the risk of the big one.. but it also increases the cost if you try to use it for regular visits.

I only know what I heard from the widow at the time. I do know the liver was (at the least one of the) thing they couldn’t fix.

Had to be from something different then the accident.. but worsened by the accident. If you have cirrhosis, the liver will not repair itself well from impact injury.

[ucodegen]

So it’s an almost successful plan — if I save all my premiums, get an unusually high rate of return and no one in my family has a single medical bill for 20 years. And then I get in a car accident.

I wouldn’t call 6% an unusually high rate of return. I ran the numbers for 6% accrued monthly on $1,500 per month — got $693,061.30 for year 20. The growth due to ROI became greater than the monthly contrib at year 12 and 8 months.

For laughs and giggles, I put in 10.8% which is around the historical S&P500 return (continuous 1950 to 2008). This gave me $1,264,626.66 with flat $1,500/month. The ROI exceeds the monthly contrib at year 7 and 6 months.

By the way, the historical return through Berkshire Hathaway is higher than 10%…

BTW, auto insurance is supposed to cover medical, and you are not likely to see $700k on an auto accident. I know someone who went through a windshield and had the face literally pealed back.. it cost less than $700k (they were also not wearing seat belts and no airbag).

Someone is missing the whole meaning of the word “insurance.”

Never missed the meaning. I have always felt that insurance should only be used to reduce risk, not to try to reduce actual health costs. Insurance does well to reduce risk, but it makes the regular costs more expensive. As the saved amount increases, just reduce insurance covering catastrophic events.

[ucodegen]

So it’s an almost successful plan — if I save all my premiums, get an unusually high rate of return and no one in my family has a single medical bill for 20 years. And then I get in a car accident.

I wouldn’t call 6% an unusually high rate of return. I ran the numbers for 6% accrued monthly on $1,500 per month — got $693,061.30 for year 20. The growth due to ROI became greater than the monthly contrib at year 12 and 8 months.

For laughs and giggles, I put in 10.8% which is around the historical S&P500 return (continuous 1950 to 2008). This gave me $1,264,626.66 with flat $1,500/month. The ROI exceeds the monthly contrib at year 7 and 6 months.

By the way, the historical return through Berkshire Hathaway is higher than 10%…

BTW, auto insurance is supposed to cover medical, and you are not likely to see $700k on an auto accident. I know someone who went through a windshield and had the face literally pealed back.. it cost less than $700k (they were also not wearing seat belts and no airbag).

Someone is missing the whole meaning of the word “insurance.”

Never missed the meaning. I have always felt that insurance should only be used to reduce risk, not to try to reduce actual health costs. Insurance does well to reduce risk, but it makes the regular costs more expensive. As the saved amount increases, just reduce insurance covering catastrophic events.

[ucodegen]

So it’s an almost successful plan — if I save all my premiums, get an unusually high rate of return and no one in my family has a single medical bill for 20 years. And then I get in a car accident.

I wouldn’t call 6% an unusually high rate of return. I ran the numbers for 6% accrued monthly on $1,500 per month — got $693,061.30 for year 20. The growth due to ROI became greater than the monthly contrib at year 12 and 8 months.

For laughs and giggles, I put in 10.8% which is around the historical S&P500 return (continuous 1950 to 2008). This gave me $1,264,626.66 with flat $1,500/month. The ROI exceeds the monthly contrib at year 7 and 6 months.

By the way, the historical return through Berkshire Hathaway is higher than 10%…

BTW, auto insurance is supposed to cover medical, and you are not likely to see $700k on an auto accident. I know someone who went through a windshield and had the face literally pealed back.. it cost less than $700k (they were also not wearing seat belts and no airbag).

Someone is missing the whole meaning of the word “insurance.”

Never missed the meaning. I have always felt that insurance should only be used to reduce risk, not to try to reduce actual health costs. Insurance does well to reduce risk, but it makes the regular costs more expensive. As the saved amount increases, just reduce insurance covering catastrophic events.

[ucodegen]

So it’s an almost successful plan — if I save all my premiums, get an unusually high rate of return and no one in my family has a single medical bill for 20 years. And then I get in a car accident.

I wouldn’t call 6% an unusually high rate of return. I ran the numbers for 6% accrued monthly on $1,500 per month — got $693,061.30 for year 20. The growth due to ROI became greater than the monthly contrib at year 12 and 8 months.

For laughs and giggles, I put in 10.8% which is around the historical S&P500 return (continuous 1950 to 2008). This gave me $1,264,626.66 with flat $1,500/month. The ROI exceeds the monthly contrib at year 7 and 6 months.

By the way, the historical return through Berkshire Hathaway is higher than 10%…

BTW, auto insurance is supposed to cover medical, and you are not likely to see $700k on an auto accident. I know someone who went through a windshield and had the face literally pealed back.. it cost less than $700k (they were also not wearing seat belts and no airbag).

Someone is missing the whole meaning of the word “insurance.”

Never missed the meaning. I have always felt that insurance should only be used to reduce risk, not to try to reduce actual health costs. Insurance does well to reduce risk, but it makes the regular costs more expensive. As the saved amount increases, just reduce insurance covering catastrophic events.

[ucodegen]

So it’s an almost successful plan — if I save all my premiums, get an unusually high rate of return and no one in my family has a single medical bill for 20 years. And then I get in a car accident.

I wouldn’t call 6% an unusually high rate of return. I ran the numbers for 6% accrued monthly on $1,500 per month — got $693,061.30 for year 20. The growth due to ROI became greater than the monthly contrib at year 12 and 8 months.

For laughs and giggles, I put in 10.8% which is around the historical S&P500 return (continuous 1950 to 2008). This gave me $1,264,626.66 with flat $1,500/month. The ROI exceeds the monthly contrib at year 7 and 6 months.

By the way, the historical return through Berkshire Hathaway is higher than 10%…

BTW, auto insurance is supposed to cover medical, and you are not likely to see $700k on an auto accident. I know someone who went through a windshield and had the face literally pealed back.. it cost less than $700k (they were also not wearing seat belts and no airbag).

Someone is missing the whole meaning of the word “insurance.”

Never missed the meaning. I have always felt that insurance should only be used to reduce risk, not to try to reduce actual health costs. Insurance does well to reduce risk, but it makes the regular costs more expensive. As the saved amount increases, just reduce insurance covering catastrophic events.

[all]

You guys are working with today’s $1.5K, extended through 20 years to get to $600K in 2030 dollars. You need to start by putting away the cost of premium from 1990. There is just no way the combined premiums since 1990 sitting in a vehicle available to general public would lead to $700K in today’s dollars.

Most people will not spend that kind of money on medical services until after they reach medicare age. Or die in a car accident. Otherwise no insurer would make profit.

Having insurance does make you cost-agnostic. When I need to see the doctor my only concern is scheduling. I don’t want to spend 2+ hours on a 5-minute session. I am aware of the cost, but I don’t care about it.

[all]

You guys are working with today’s $1.5K, extended through 20 years to get to $600K in 2030 dollars. You need to start by putting away the cost of premium from 1990. There is just no way the combined premiums since 1990 sitting in a vehicle available to general public would lead to $700K in today’s dollars.

Most people will not spend that kind of money on medical services until after they reach medicare age. Or die in a car accident. Otherwise no insurer would make profit.

Having insurance does make you cost-agnostic. When I need to see the doctor my only concern is scheduling. I don’t want to spend 2+ hours on a 5-minute session. I am aware of the cost, but I don’t care about it.

[all]

You guys are working with today’s $1.5K, extended through 20 years to get to $600K in 2030 dollars. You need to start by putting away the cost of premium from 1990. There is just no way the combined premiums since 1990 sitting in a vehicle available to general public would lead to $700K in today’s dollars.

Most people will not spend that kind of money on medical services until after they reach medicare age. Or die in a car accident. Otherwise no insurer would make profit.

Having insurance does make you cost-agnostic. When I need to see the doctor my only concern is scheduling. I don’t want to spend 2+ hours on a 5-minute session. I am aware of the cost, but I don’t care about it.

[all]

You guys are working with today’s $1.5K, extended through 20 years to get to $600K in 2030 dollars. You need to start by putting away the cost of premium from 1990. There is just no way the combined premiums since 1990 sitting in a vehicle available to general public would lead to $700K in today’s dollars.

Most people will not spend that kind of money on medical services until after they reach medicare age. Or die in a car accident. Otherwise no insurer would make profit.

Having insurance does make you cost-agnostic. When I need to see the doctor my only concern is scheduling. I don’t want to spend 2+ hours on a 5-minute session. I am aware of the cost, but I don’t care about it.

[all]

You guys are working with today’s $1.5K, extended through 20 years to get to $600K in 2030 dollars. You need to start by putting away the cost of premium from 1990. There is just no way the combined premiums since 1990 sitting in a vehicle available to general public would lead to $700K in today’s dollars.

Most people will not spend that kind of money on medical services until after they reach medicare age. Or die in a car accident. Otherwise no insurer would make profit.

Having insurance does make you cost-agnostic. When I need to see the doctor my only concern is scheduling. I don’t want to spend 2+ hours on a 5-minute session. I am aware of the cost, but I don’t care about it.

[ucodegen]

You guys are working with today’s $1.5K, extended through 20 years to get to $600K in 2030 dollars. You need to start by putting away the cost of premium from 1990. There is just no way the combined premiums since 1990 sitting in a vehicle available to general public would lead to $700K in today’s dollars.

You mean adjust for inflation because if I was starting the comparison at 1990, $1500 would be worth more in 1990 than now…

This is why I used S&P500 numbers as well. With the rate adjusted for inflation (approx 2.8% avg), I got about 6.8% ROI from S&P 500, which does give me more than $600k starting at the equivalent 1990 and the equiv $1500 adjusted for inflation. Using backwards CPI adjustment on inflation of 2.8%/yr, I started with $858.26/month adjusting each pay period by inflation and having an ROI of 10.8% not adjusted for inflation: year 20 gave me $808,413.38 with the monthly contrib at year 20 being $1500.

[ucodegen]

You guys are working with today’s $1.5K, extended through 20 years to get to $600K in 2030 dollars. You need to start by putting away the cost of premium from 1990. There is just no way the combined premiums since 1990 sitting in a vehicle available to general public would lead to $700K in today’s dollars.

You mean adjust for inflation because if I was starting the comparison at 1990, $1500 would be worth more in 1990 than now…

This is why I used S&P500 numbers as well. With the rate adjusted for inflation (approx 2.8% avg), I got about 6.8% ROI from S&P 500, which does give me more than $600k starting at the equivalent 1990 and the equiv $1500 adjusted for inflation. Using backwards CPI adjustment on inflation of 2.8%/yr, I started with $858.26/month adjusting each pay period by inflation and having an ROI of 10.8% not adjusted for inflation: year 20 gave me $808,413.38 with the monthly contrib at year 20 being $1500.

[ucodegen]

You guys are working with today’s $1.5K, extended through 20 years to get to $600K in 2030 dollars. You need to start by putting away the cost of premium from 1990. There is just no way the combined premiums since 1990 sitting in a vehicle available to general public would lead to $700K in today’s dollars.

You mean adjust for inflation because if I was starting the comparison at 1990, $1500 would be worth more in 1990 than now…

This is why I used S&P500 numbers as well. With the rate adjusted for inflation (approx 2.8% avg), I got about 6.8% ROI from S&P 500, which does give me more than $600k starting at the equivalent 1990 and the equiv $1500 adjusted for inflation. Using backwards CPI adjustment on inflation of 2.8%/yr, I started with $858.26/month adjusting each pay period by inflation and having an ROI of 10.8% not adjusted for inflation: year 20 gave me $808,413.38 with the monthly contrib at year 20 being $1500.

[ucodegen]

You guys are working with today’s $1.5K, extended through 20 years to get to $600K in 2030 dollars. You need to start by putting away the cost of premium from 1990. There is just no way the combined premiums since 1990 sitting in a vehicle available to general public would lead to $700K in today’s dollars.

You mean adjust for inflation because if I was starting the comparison at 1990, $1500 would be worth more in 1990 than now…

This is why I used S&P500 numbers as well. With the rate adjusted for inflation (approx 2.8% avg), I got about 6.8% ROI from S&P 500, which does give me more than $600k starting at the equivalent 1990 and the equiv $1500 adjusted for inflation. Using backwards CPI adjustment on inflation of 2.8%/yr, I started with $858.26/month adjusting each pay period by inflation and having an ROI of 10.8% not adjusted for inflation: year 20 gave me $808,413.38 with the monthly contrib at year 20 being $1500.

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