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How to get there from here

Our plumber/electrician dropped by the other day (a snowplow broke the cover off our water-shutoff valve this winter, and we're strategizing what to do about it) and I asked him about his bum knee, so we ended up getting into a political conversation about healthcare reform. He was all upset that he's going to have to pay $800 to the IRS because he won't buy health insurance, except of course he won't because he's covered under his wife's policy from her job. And then he was concerned about all the young healthy people who were going to have to pay that money, and I explained to him about adverse selection, and then he started complaining about his retirement savings, which were cut in half during the crash...

The problem he has, and it's a pretty serious one, is not addressed by the current reform. He's been working for 35 years straight, with the occasional vacation or time off for illness, and one knee has a torn ligament with a few shreds of tissue holding it together. He laughs as he tells how the first time he went to a doctor for it the doctor couldn't believe he'd actually walked through the door. Lately his other foot has started bothering him. Oh, and his shoulder has a constant burning sensation, so that he can't get much sleep. Can we say rotator cuff? Fixing the knee will take 6-9 months (four of it in a cast) and fixing the shoulder just about the same. But guess what, they can't be done at the same time because he's going to need that shoulder so that he can be on crutches while the knee is recovering. So he's looking at a year or two out of wok while his body gets fixed. For a sole proprietorship whose customers really can't turn off their plumbing problems for a year. In other words, he's screwed.

There pretty obviously ought to be a program to deal with this. He's got another 20+ years of serious earnings ahead of him, if he can once get fixed. Otherwise eventually too many things will break at one time and that will be it. He looked into disability insurance, and he couldn't find a policy that would cover his monthly nut even if they didn't exclude the knee and the shoulder as pre-existing. So of course he takes his usual conservatism and piles his fear onto it and hates healthcare reform, because it doesn't (except very indirectly) do anything for him. Ugh.

(It seems to me that it's possible social security disability would cover at least some of his expenses if the recovery period lasts more than a year, but it's not clear if that can be arranged prospectively, plus it's one of those evil gummint programs for freeloaders.)


( 3 comments — Leave a comment )
Apr. 1st, 2010 12:13 am (UTC)
Both disability and long-term care insurance really need review. They only work well if people start paying for them while they are young and keep paying throughout their lives. Sort of like, um, taxes.

I'm amazed at how many people I work with opt to not buy long-term disability insurance, at less than $50/month, through work. If you look at the numbers, it's far more likely that you'll need it than term life. But no one plans to be disabled...
Apr. 1st, 2010 01:02 am (UTC)
Part of the problem, I think, is that so much disability insurance sucks. When this guy looked into it, the most any company was willing to cover (even ignoring the fact that they would have refused to pay because of the pre-existing conditions) was $1500 a month. Which is better than nothing but pretty much guarantees a slow loss of car, house, belongings etc.

The other thing I recall is the crucial distinction between "disability" and "own-job disability". The formers stops payment as soon as the covered individual is capable of doing some job -- which is pretty much worthless to most people (albeit rational for the insuror).

It's probably much better through a company, where the risk pool is big, rather than through the individual market, where the only people buying are the ones who can see the likelihood of disability even with the usual very short time horizons people have. But yeah. Like taxes would be a good idea, which is one reason social security disability is there as a last resort. (This poor guy listened to the wrong people at pretty much every turn -- for the first 20 years of his career he was buying life insurance even though he didn't have any dependents.)
Apr. 1st, 2010 10:44 pm (UTC)
(This poor guy listened to the wrong people at pretty much every turn -- for the first 20 years of his career he was buying life insurance even though he didn't have any dependents.)

That's exactly the situation that many people find themselves in, though! People don't behave rationally. They look at the immediate future and not the long-term. A classic example is all of the (female) teachers I know who cashed out of their pensions when they decided to stay home with their kids and use the money for other purposes--bigger house, mini-van, etc. When they went back to teaching, either by choice or necessity, they really regretted their choice. These are educated people, too!

Also, most people don't know enough to make an informed decision even if they wanted to do so. A for-profit industry is designed to get people to make decisions that benefit the industry, not the individual. Choice sounds great, but when people make bad choices we all suffer, even if they suffer the most.
( 3 comments — Leave a comment )