This past week I received many questions assuming amendment or repeal of the Affordable Care Act (ACA). If either happens, clients want to know what they should now assume in their spending plans for future health care costs. Fortunately my NAPFA colleague, Dr. Carolyn McClanahan, CFP® , immediately published some very educated guesses. McClanahan, a former ER physician, read the entire ACA six years ago, and has since become one of the nation’s leading experts on money and medicine.
Among her major predictions:
1) Guaranteed coverage will likely go away, returning to pricing based on medical underwriting.
2) Therefore, premiums will decline significantly for healthy people, and increase for those with health issues. I would add to these that younger, healthy people without access to large employer-subsidized plans will likely opt out of coverage all together. Those with significant health issues may only find coverage in expensive, last-resort, high-risk pools with limited benefits.
3) Employees of small businesses without group coverage may now get to deduct their health insurance premiums, which should be a significant tax savings for them.
4) Pricing of medical services will be required to become more transparent. This will allow more comparison shopping for those who have the time to do it. McClanahan notes, however, that those who are acutely sick, nor their family caregivers, don’t often have this luxury. She suggests this may be a service financial advisors could add.
As an example of this last point, recently I had a routine vision checkup with a new doctor. At the check-out desk, I was told, “That will be $40.” I couldn’t believe that was it, so as I handed her my credit card, I asked, “Are you sending me a bill for the rest?”
“We’re going to send it through your insurance and it may or may not be covered,” she replied.
“I understand. But I know my insurance doesn’t cover this. How much of a bill should I expect?”
She looked stunned that I would ask such a thing. “Well, I, I, I” she stuttered, “I can’t tell you now. It depends on your insurance.”
“Ok,” I said, “Let’s never mind the insurance. What if I was self-pay? How much would today’s visit be?”
“Well, it depends on a bunch of different things…” She still either didn’t know or didn’t want to tell me. Then she stood up to indicate I could be on my way.
“Just assume it’s a normal routine checkup,” I said, not moving. She wasn’t getting rid of me that easy.
Finally she consulted a piece of paper next to her computer. “It would be $198.”
“With or without the $40 I already gave you?”
“Without.”
“So it’s $238, correct?” No wonder she didn’t want to tell me.
“Yes.”
“And what if my appointment had been with one of your M.D. opthamologists for a routine checkup instead of the D.O. optometrist I saw?” I continued.
“I think it would be the same.”
“Would you check, please?”
Looking down at her paper, she said, “Oh, it would have been $228.”
“So, another $30 for the M.D. checkup, correct?”
“Yes, that’s right.”
“Thanks very much.”
Jeez – all that for a routine eye exam.
Even before ACA, health care costs have been a major, complicated piece of everyone’s spending plan puzzle, whether for premiums, services, or prescription drugs. If you haven’t looked into or shopped all three, you might be spending more than you need to. If you have the luxury of time, use it to ask questions and be persistent. If you don’t have that luxury, there might be professionals willing to help, coming soon to a financial planner’s office near you.
