Monday, May 17, 2004
Government "safety nets" encouraging a lack of responsibility
["Retirees are not saving enough for health care costs," Daily Policy Digest, NCPA, 17 May 2004.]
One of the unintended consequences of creating handouts is that people change their behavior to accomodate them. This is certainly the case in many areas of health care. As a new study reveals, when these behavior changes are based on false assumptions, the results can be devastating. As Stephen Moses has pointed out for Flint Hills on previous occasions, Americans need to change the way they view health care provision and begin to take greater responsibility for their own care:
Retirees drastically underestimate how much they will pay in health care costs by wrongly assuming that Medicare and employer health plans will pick up the tab, says the Wall Street Journal.
A recent study by the Employee Benefits Research Institute found:
- Actual health care costs are five times higher than what most retirees anticipate.
- Despite the new Medicare drug benefit, retirees need to save anywhere from $80,000 to $700,000 in order to pay out-of-pocket health care costs.
- Employers are providing less coverage for retired former employees, and the level of benefits is expected to drop to 10 percent of total medical expenses by the year 2031.
- Currently, only 71 percent of employers are increasing retiree premium contributions.
Paul Fronstin, director of the EBRI study, suggests that individuals:
- Estimate their lifespan, considering factors such as nutrition, health habits and family history.
- Double-check what benefits are offered by their employer; since 1988, the number of employers (with more than 200 employees) offering retiree health coverage has declined by almost 50 percent.
- Assume a life expectancy of 80 and save at least $80,000 to cover health care costs not covered by Medicare.
- Purchase long-term care insurance to cover nursing home expenses, which can run $50,000 per year or more.
[See Stephen A. Moses, "Project Proposal: Controlling Medicaid Long-Term Care Costs," The Flint Hills Center.]
["Retirees are not saving enough for health care costs," Daily Policy Digest, NCPA, 17 May 2004.]
One of the unintended consequences of creating handouts is that people change their behavior to accomodate them. This is certainly the case in many areas of health care. As a new study reveals, when these behavior changes are based on false assumptions, the results can be devastating. As Stephen Moses has pointed out for Flint Hills on previous occasions, Americans need to change the way they view health care provision and begin to take greater responsibility for their own care:
Retirees drastically underestimate how much they will pay in health care costs by wrongly assuming that Medicare and employer health plans will pick up the tab, says the Wall Street Journal.
A recent study by the Employee Benefits Research Institute found:
- Actual health care costs are five times higher than what most retirees anticipate.
- Despite the new Medicare drug benefit, retirees need to save anywhere from $80,000 to $700,000 in order to pay out-of-pocket health care costs.
- Employers are providing less coverage for retired former employees, and the level of benefits is expected to drop to 10 percent of total medical expenses by the year 2031.
- Currently, only 71 percent of employers are increasing retiree premium contributions.
Paul Fronstin, director of the EBRI study, suggests that individuals:
- Estimate their lifespan, considering factors such as nutrition, health habits and family history.
- Double-check what benefits are offered by their employer; since 1988, the number of employers (with more than 200 employees) offering retiree health coverage has declined by almost 50 percent.
- Assume a life expectancy of 80 and save at least $80,000 to cover health care costs not covered by Medicare.
- Purchase long-term care insurance to cover nursing home expenses, which can run $50,000 per year or more.
[See Stephen A. Moses, "Project Proposal: Controlling Medicaid Long-Term Care Costs," The Flint Hills Center.]
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