09 September 2012

Healthcare's "massive transfer of wealth"

Here are excerpts from one family's story about the financial aspects of end-of-life-related healthcare:
My aunt, aged 94, died last week. In and of itself, there is nothing remarkable in this statement, except for the fact that she died a pauper and on medical assistance as a ward of the state of Minnesota...

My aunt and her husband, who died in 1985, were hardworking Americans. The children of Polish immigrants, they tried to live by the rules. Combined, they worked for a total of 80 years in a variety of low-level, white-collar jobs. If they collectively earned $30,000 in any given year, that would have been a lot.

Yet, somehow, my aunt managed to save more than $250,000. She also received small pensions from the Teamsters Union and the state of California, along with Social Security and a tiny private annuity. In the last decade of her life, her monthly income amounted to about $1,500...

But when she fell ill and had to be placed in assisted living, and finally in a nursing home, her financial fate was sealed. Although she had Medicare and Medicare supplemental insurance, neither of these covered the costs of long-term care. Her savings were now at risk, at a rate of $60,000 a year...

In the end, she spent everything she had to qualify for Medicaid in Minnesota, which she was on for the last year of her life. This diligent, responsible American woman was pauperized simply because she had the indecency to get terminally ill...

Though I have not been able to find statistics on the subject, I am certain that there will be a massive transfer of wealth over the next two or three decades, amounting to hundreds of billions of dollars or more, from people just like my aunt to health insurers and health care providers...

This week, I was about to close out her checking account in the amount of $215, the sum total of her wealth. But I received, in the mail, a bill from a heath care provider in the amount of $220. Neither Medicare nor her supplemental insurer will pay it, because it is an unspecified "service not covered."
More details of the story at the StarTribune.  Of course, it's just one family's story.  Repeated hundreds of thousands of times across the country.

My own mother, age 94, has asked me, "when the time comes" to "put her down."

23 comments:

  1. My mom and I are in the same boat. She has Parkinson's disease and busted her hip a few years ago. After all the hoopla was over, I ended up quitting my job to be her in-home caregiver because it was costing her more than I made to have someone care for her while I was at work.

    She had to spend down her entire savings without giving more than $200 a month _total_ in gifts to her family members. Tough when you have grandkids in college that you were helping with tuition! Christmas and birthday present shopping had to happen all year 'round to keep within the spending limits. And she had to sell her house and spend all that, too, or the state would come in and take it after she died in what is called "estate recovery".

    Three hips, two knees, and three years later, she's covered by the state medicaid/medicare system and now they pay me (a whopping $10 an hour) to be her caregiver. I'm just glad we got the help of a good elder law attorney to plan this out ahead of time, right after her first hip. Even so, having done everything right and according to the rules, there was over six months in the middle where her savings were all spent and the state put us through the bureaucratic wringer before they would start covering her expenses.

    The story of today's seniors: "How to go from financially secure to 'categorically needy' in five years or less". When my time comes, just park my butt on a beach in Mexico and let me turn to leather without governmental interference.

    ReplyDelete
  2. There is so much to know about end-of-life care. The system may be broken, but there's little incentive for most people to change it - unless you're in the process of dealing with it.

    Elder care attorneys are some of the best resources around for juggling finances and whatnot. Here in the SF Bay Area, there's a lawyer that has a talk radio show who specializes in the subject (though the show's topics vary widely). On occasion he gets calls from people that are in this lady's position - too "rich" to receive aid, but not rich enough to actually pay for things long term.

    On balance, I'd say that, although it's a nice idea that we could leave something to our kin, it's not a bad way to go spending your final dollars in arranging your funeral. Sort of a "break-even" in a way.

    ReplyDelete
  3. I'm hoping that the Affordable Care Act will go some way to mitigate this. If not, then let's fight for the right (as seniors) to be treated with as much love and consideration as we treat our beloved pets when their time comes.

    ReplyDelete
  4. I am learning all of this the exact same way and it intensifies my depression like only one other thing before in my life. You can do everything right in America, everything, and still end up at the mercy of government bureaucrats who could not care less if you live or die. If you also happen to not have family in town or belong to a wealthy church, then you are really one step away from Calcutta. Being forsaken in the land of plenty by those who insist to the camera that they are so very compassionate is especially harrowing, because they are nowhere near me and don't know I exist. --A.

    ReplyDelete
  5. Oh, I meant to add: the chief flaw in all the healthcares in debate, Romney or Obama or Status Quo, is that they all still require insurance companies be integral. WTF? They are the robber barons that prey on the sick and elderly and we keep acting like of course the entire system relies on them. It's macabre and lunatic. --A.

    ReplyDelete
    Replies
    1. Unfortunately, the Democrats in Congress modified ObamaCare somewhat in order to get Republican votes, and when they failed to get any, they wimped out and passed the damn thing anyway. If it were up to me, I might have done it that way, but when the Republicans refused to vote for it, then I would have pushed through Medicare-for-all like Bill Maher of Real Time wanted, and still wants.

      Delete
  6. I agree. May I cross-post to my blog with attribution?

    ReplyDelete
  7. You tell a most normal story. we've all lived some version of it. Accept my sincere condolences. It is my understanding that the affordable care act will cut non-medical payments to hospitals and insurance companies, while expanding coverage for middle class seniors. WE REALLY need to fix how we treat our elders- ourselves. Knowing what his mother and grandparents went through, I feel the president's sincerity in trying to fix this. In my heart I just don't think the son of a governor and industrialist really understands normal Americans. Thanks for letting me have me say! God Bless America, and all of us

    ReplyDelete
  8. By the way:

    The real transfer of wealth was from you & me to Wall Street and banks! I don't mind sharing with my neighbors - but not millionaires.

    ReplyDelete
    Replies
    1. You got that right Cloudia. BTW, the spelling of your nick improves the ability of most to pronounce Claudia correctly (*ahem*, at least, to Latinos, blood of which I possess). Don't know if that's your intent, but that's what I enjoy about it.

      Sadly, the Saints lost, but, Manning helming the Broncs is doing his usual great job, so, here's hoping.. --A.

      Delete
  9. Democrats, republicans, it does not matter.

    Although she had Medicare and Medicare supplemental insurance, neither of these covered the costs of long-term care.

    This is the problem. Insurance, be it private or government controlled, is still somehow allowed to not cover essentials.

    The second problem is that medical care is simply too expensive. Medicines cost too much, and doctors make too much.

    ReplyDelete
  10. If you select 94-year-olds at random from all the humans who have ever lived, not one in 10,000 would be able to marshal $60,000 a year to keep themselves alive... the system is wrong to try to support people like that and she was wrong to try to qualify. It's fighting nature at unacceptable cost.

    ReplyDelete
    Replies
    1. I'm curious as to what you think should have been done in her case. She wasn't terminally ill in a hospital, so it wasn't a choice to "let her die." She and her family were unable to care for her needs. Would you have favored simple neglect, hoping for an illness to develop? Or perhaps an active euthanasia?

      Delete
    2. Well, I'd hate to be in that position, it would not be fun choices. In theory you could look at what people did a century ago when nobody had Medicare or $60,000 a year, but we don't have a time machine to really find out. I checked on what people do with the elderly in India and got some articles about "Neglect takes all forms. The children do not give their parents audience. They will not give them adequate food, do not buy them proper clothes, do not provide them with basic medicine. They may have taken away their property. They may send them to sit in a corner of a room alone... lurid tales of grandmothers who, on being discharged from a hospital, are abandoned at the crematorium to die by children unwilling to continue caring for them at home."

      That makes it seem like it might actually be illegal to make your old person survive only on the income that's available to them, so you might be forced to get on Medicaid regardless of your philosophy about freeloading.

      But I save about 45% of my income and $60,000 represents about 4-5 years of savings for me. One year for a 94-year old at the cost of four years of the life of someone like me doesn't sound that good to me.

      Delete
    3. I agree. There is no easy way out when certain circumstances coalesce into a problematic situation. Many elderly people want to have the option to end their own life if/when they become a burden on their children. Legislators are reluctant to grant them that option.

      Delete
    4. the system is wrong to try to support people like that

      That seems an realistic, yet cold-hearted answer to the situation. However, most European countries manage to keep auntie alive. Without ridiculous premiums, and without any co-pays. Why can't the US? The US is richer than those countries. And bigger, so economies of scale work in your favor.

      The problem is that the US refuses to recognize that health care is not is free market. You can not opt out of health care. You can not choose when to consume health care. When you need health care, you do not have time to choose your provider. And even if you had, you would not be knowledgeable enough to. Customers simply do not have free choice.

      It is odd that Americans strongly believe that the government should provide them with "free" roads and infrastructure so that the economy can run smoothly, but balk when the government tries to keep people's lives running smoothly. It makes no sense. Living people are necessary for the economy to run.

      [The captchas are getting impossible)

      Delete
    5. I totally agree re the abysmal captchas. I wish blogspot offered some alternative.

      Delete
    6. Nepkarel, spot on.

      I second the captcha criticism. I end up typing fjfjfjfj, repeatedly, until it shows me something discernible by human rods and cones. I gave up expecting actual words in English a while back. --A.

      Delete
  11. Hang on a second here. Although this is being termed a "transfer of wealth", presumably from this hospitalized woman to "insurance companies" or perhaps even "the state", if she was allowed to pass $250k to her descendants while you and I paid for her care (either in the form of taxes or in the form of higher premiums), this would be an even more egregious transfer of wealth.

    Yes, it stinks that you can get ill and all the money you saved will be gone, but someone has to pay for the treatment. Who should have paid it? Well, your aunt should have paid at least some - in the form of insurance premiums. She did not, which is why she was able to amass $250k. She self-insured for this particular situation, and her bet was a losing one. That happens.

    Insurance premiums for this kind of thing are very high because few people buy nursing home insurance. In fact, it might have even been too expensive for your aunt. The best alternative would be for a government program, funded via progressive taxes (i.e. everyone pays in an amount so that the impact of the taxes to their lives is similar), everyone gets the same care so there is incentive to fund it properly.

    ReplyDelete
    Replies
    1. You say "while you and I paid for her care" without mentioning that other people would then be paying for your and my care.

      Delete
  12. This is what has happened to my aunt. She had to sell all of her possessions (2 houses, custom made truck, RV, cars, and a boat), and wipe out a $40K bank account, stocks, etc. to qualify for Medicaid. We had to put her in a home and the cost is exorbitant. She still gets her social security and the pension from her deceased husband, but the checks go to the home in full. It's a long story as to why she's there and not in the house we had to sell so she could get public aid, but she just wouldn't cooperate. Has been deemed mentally ill, a danger to herself, and is in the early throes of dementia. Still, we were preparing her house but it was for nothing. She just said "Why the f*** should I go back to an empty house?" and in the home she stays.

    ReplyDelete

Related Posts Plugin for WordPress, Blogger...