Challenges of healthcare costs in retirement
As part of our monthly series, The Bermuda Realistic Retirement Reviewer we continue our discussion of healthcare costs with a focus on retirees and those soon to retire.
Individuals who are retired or approaching retirement overwhelmingly have two huge concerns: getting sick, and not having sufficient financial resources to pay for good healthcare.
Retirees are generally described as living on a fixed income. As they no longer receive a paycheque, their accumulated savings and pensions must generate adequate funds each year for at least a minimally satisfactory lifestyle. Without income, any capital rapidly depletes for monthly health and living needs, so retirees have increasingly continued to work for as long as possible.
An individual retiree’s poor health ensures job loss, portending extremely difficult financial straits in the future. Feedback from readers has mentioned elderly retirees who, having had no access to any pension besides Government Old Age Social Insurance, find this stipend completely inadequate as a full retirement income stream.
This leaves them the stark choice of having to choose between medicine and food, or relying upon relatives to feed and shelter them in a family household. Geriatric counsellors and eldercare professionals will tell you the shelter solution is a very challenging situation for all involved.
These facts are reiterated in the Bermuda Health Council 2010 Profile of Bermuda’s Senior Population, which showed:
• 8,678 of our seniors were over age 65
• 62 per cent resided in two person households, 31 per cent in single households and 7 per cent (more than 600 seniors) were living with relatives at that time. Feedback points to number of seniors being sheltered having grown.
• 50 per cent of the 8,678 aged 65 and above live in households with annual income of less than $60,000.
• Median annual pension income per individual is $15,606.
• Health status: most had some sort of health insurance, while 77 per cent stated they were in good to excellent health; however, 66 per cent were overweight or obese; 49 per cent had a chronic health condition; and 32 per cent had a disability.
Somehow the “good to excellent” health statement appears at odds with the last three health issues.
The greater picture here is that these numbers are eight years old. What are they now? Where are they now? How are they coping?
Readers, bless your hearts, continue to write to me. Keep those letters, complaints, experiences, and questions coming. I welcome them all.
Here is a reader retirement scenario, with personal information redacted.
Reader A wrote: “We are now in their early eighties, retired for more than 15 years, still in fairly good health although we worry more now.”
During modest working careers they both had good, local employer-provided comprehensive health insurance. Once retired, they retained the same full health plans for a couple more years.
Then, as the premiums became a huge drag on their living budget, they entered the new Future Care Government programme, where the monthly premium is $120 per individual. Benefits were less, of course, so they tightened up, kept saving and maintaining good health.
Thirteen years later, the monthly premiums stood at $440, and have just increased to $500.14 per person, a 416 per cent increase to $12,000 annually for the couple.
With health insurance premiums increasing so dramatically, they stated there is absolutely no way their very modest savings/investment portfolio can continue to surmount such an inflation rate. Investment returns in this strata are rampantly risky — never a good idea for retirees living on fixed incomes. They are living closer and closer to the line with serious financial concerns and some resentment. There is no reward at all for staying in good health.
Meanwhile, Reader B provided insights, criticisms, and serious thoughts on Bermuda’s healthcare challenges. Keep in mind these are reader opinions, not mine, nor The Royal Gazette’s.
• Cap specialist charges.
• Monitor healthcare providers duplicating services.
• Fully inform all healthcare users of their costs by sending detailed bills of the customer’s costs and the amounts paid on the customer’s behalf by insurers.
• Charge individuals who use the emergency care facility for minor treatments that should be directed to a general practitioner.
• Private diagnostic facilities operate in direct competition with Bermuda’s only hospital and are a direct conflict of interest if the practitioner is also associated with the hospital.
• Encourage health insurers to provide online advance directives for end-of-life care. Many individuals would prefer to remain at home or at hospice rather than experiencing invasive procedures that will severely financially encumber their families. The last months of life can be the most expensive healthcare period — when the patient may prefer palliative care, remaining close to family, relatives and friends.
• Implement and make the Sugar Tax more comprehensive. The list of “sugar items” should also include what Michael Pollan, in his book In Defense of Food, calls “edible non-food substances” such as highly processed snacks loaded with modified food starch and corn syrup that never go bad — some having shelf life of more than five years.
Reader C inquired if international health insurance is available if a person moves to another jurisdiction. Reading between the lines, you can surmise this family’s forward planning.
Bermuda is not alone. One can certainly say that all old global economies are grappling with the same challenges. How to efficiently manage the ever-increasing cost of healthcare with a growing elderly demographic?
Three articles worth looking at are:
• UK: “NHS overwhelmed in Britain, leaving patients to wait” by Ceylan Yeginsu. The New York Times, January 3, 2018, at https://tinyurl.com/yc7eqplu
• Canada: How healthy is the Canadian healthcare system? Published on September 24, 2017 by The Conversation.com at https://tinyurl.com/y8xfweht
• US: “Ageing in America: Land of the Free, Home of the Gray” by Andrew Soergel. US News at https://tinyurl.com/y82lg7ef
Michael Pollan. In the Defence of Food at https://michaelpollan.com/books/in-defense-of-food/
The next part of this monthly series is “Proposed, but postponed in 2011 — a Look at the National Health Care Plan.” What are the healthcare numbers now? Can Bermuda achieve healthcare/cost efficiency?
• Martha Harris Myron CPA CFP JSM: Masters of Law — international tax and financial services. Dual citizen: Bermudian/US. Pondstraddler Life, financial perspectives for Bermuda islanders and their globally mobile connections on the Great Atlantic Pond. Finance columnist to The Royal Gazette, Bermuda. All proceeds earned from this column go to The Reading Clinic. Contact: email@example.com
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