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QUESTION:
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Some Thoughts on Age and Income and the Cost of Aging | According to the US Census Bureau, the two poorest socio-economic groups in America are Single Mothers and the Elderly, (75 years old or older). Because NewRetirement services older Americans, we won't discuss the reasons Single Mothers are among the poorest Americans.
The income of retirees keeps declining as they grow older. There are exceptions, but the rule is that on average, after we retire, our incomes will continuously decline. And, indeed, we will end up as part of the poorest socio-economic groups in America.
Why is this so for seniors? The answers are simple.
(1) We earn less after we retire than when we were working. The response to that issue includes finding work that pays. Ideally, it may include health insurance that you can afford if you need it. Of course, our ability to work will be dependent on the state of our health.
(2) Our health declines and the need for medical care increases as we get older. Indeed, on average the most expensive month for medical care will be the month before we die.
There is a third issue that, I think, needlessly increases the cost of medical or health care. And that is how we have setup our health insurance system in the United States.
Insurance as I have experienced it, normally has a relatively low premium and it only pays for large losses and the claims against our insurance are, hopefully, infrequent. It also has varying deductibles that affect the premium that we pay. Take, for example, home owner's insurance. First, it is mandatory; the mortgage companies require it. We all must have home owner insurance. Second, we can shop around for the best deal for our particular insurance needs. Third, the more frequently we file claims, the more likely that the insurance company will cancel our policy -- so we have an incentive to take care of normal maintenance and repair issues ourselves. And the builder is required to build houses that meet the local building code so that it will provide the owner and the insurance company with some assurance as to the design, materials used, workmanship, etc. meed minimum quality and performance requirements.
Now let's look at health insurance, at least as I have experienced it.
(1) First, it pays for every medical claim, large and small, so long as the medical provider is qualified under the insurance company's list of approved medical doctors/clinics/hospitals. And so long as the medical condition is listed in the insurance company's long list of legitimate and qualifying medical conditions and treatments, we will be compensated. Check that -- the medical service provider will be paid a certain amount and we will pay any remainder.
(2) If this were setup like home owner insurance, health insurance would only pay for treatments that were exceptionally expensive and for illnesses that occurred on an exception or relatively rare basis.
This would result, I think, on our suddenly deciding whether we wanted, or really needed to go see the doctor for a sore throat or a fever or other initially minor condition.
Medical expenses would be paid by insurance companies much less frequently and policy holders would exercise far more discrection as to whether a trip to the doctor's office was necessary.
There is a name for this health insurance arrangement that we have. It is called Insulation by Arnold Kling. It is worth a read by us. His response is not perfect, but it does suggest an alternative to the present setup that we call health insurance in America.
http://www.cato-unbound.org/wp-print.php?p=373
In another article, I hope to discuss the issue of Entitlements, and their escalating costs. |  | asked by grandpa24551, 1/18/2007 |
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Categories:
Health and Health Care, Work and Retirement, Jobs for Retirees, Health Insurance, Aging
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