Congratulations! Thirty years ago you started on your career with a salary
of $1000 and a health insurance policy - open ended - no questions asked -
that cost your employer $100. You figured that this was a $1100 dollar
package, salary plus health insurance, and it was good for a newcomer in
those days.
The next year, your package went up by 10%, which was a nice raise. Your
package went up to $1210. And your health insurance costs went up by 20%
to $120. You were taking home $1090, a 9% net increase, so you couldn't
knock that.
After two years, your package went up to $1331. With insurance up 20
percent again, this time to $144, take home grew to $1187. Nice work, Ken.
Ten years on the job and the package will have increased to almost $2700,
and your takehome has doubled to almost $2200 per month. Pretty good for a
guy 10 years into his career, wouldn't you say? By the way, that 500 plus
difference is going into health insurance - which is increasing at 20% per
year as steadily as your package increases by 10% per year.
After 16 years, your monthly package totals about $4600, and your takehome,
now about $3100, is still rising at 5.5% a year. No complaints? Don't be
so sure.
Now let's look at when you had been working 21 years. Your package, now
$7400 per month, is still rising at 10% per year. Your medical package is
still rising at 20% per year. Your take home pay 66 have increased 1% this
past year, but it would have peaked. Next year it will decrease by one
percent.
If you were to have continued at this rate, in the twenty-ninth year your
package would be $14,400 a month - pretty good, eh? - and you would owe the
company $600 a month to continue to work there. Yes, that's a negative
takehome pay. And next year it gets worse.
As I give you your pin for thirty years of service, Ken, your package goes
over $19,000 per month. Somewhere along the way you swapped that
open-ended - no questions asked policy for a restrictive HMO or PPO, where
they tell you whose services you must use and when they will pay for them.
Ken, it was your choice to do it, but the alternative would have been to
keep that open-end health insurance policy that would be costing you almost
$24,000 per month this coming year. You made the switch and now you have
given a clerk in some ivory tower control as to how money will be spent on
you.
I can't verify that health insurance costs have gone up by 20% per year,
any more than I could verify that your value to your employer would grow by
10% each year. Other assumptions will also show the same result, though
perhaps not as graphically. What I can do - and hope that I have succeeded
in doing - is explain why HMO's have appeared and how some control must be
placed on insurance costs.
Art
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Arthur Hirsch {} [log in to unmask] {} Lewisville, TX {} 972-434-2377
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Always Remember This: Happiness Is Right, So Choose Happiness
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