DAVE SAYS

Advice for old debts and pre planning funerals.

Dear Dave,

My wife and I have $72,000 in debt from student loans and a car loan. We’re trying to pay off our debt using the debt snowball system, and we each make about $45,000 a year. She’s a teacher and she’s planning on going back to school for her master’s degree, but she’s thinking about quitting her job to do this. She’ll be able to make more money with the additional education, and she would only be unemployed for two years. The degree program will cost us $2,000 out of pocket per semester for two years. Does this sound like a good idea?

—Chris

Dear Chris, There’s no reason for your wife to quit her job to make this happen. Lots of people— especially teachers—hold down their jobs and go back to school to further their education. I’m not sure trying to make it on one income when you’re that deep in debt is a good idea.

Whatever you do, don’t borrow more money to make this happen. Cash flow it, or don’t do it. We’re talking about $8,000 total, and you’ve got $72,000 in debt hanging over your heads already. My advice would be to wait until you’ve got the other debt knocked out, then save up and pay cash for school. You could slow down your debt snowball, and use some of that to pay for school, but I’d hate to see you lose the momentum you have when it comes to getting out of debt.

The choice is yours, but don’t tack on any more student loan debt. I know her income will go up with a master’s degree, so from that standpoint it’s a good thing to do. But if you do a good thing a dumb way, it ends up being dumb!

—Dave

Dear Dave,

My grandmother passed away a week ago. She was 98, and I know both she and my grandfather had prepaid for their funerals in 2004. However, there were outstanding costs of $1,500 with the funeral services that we had to pay out of pocket, because she had outlived the insurance policy attached to the prepayment plan. I know you say it’s always better to preplan, not prepay, for a funeral. Can you refresh my understanding of this?

—Rebecca

Dear Rebecca, Let’s use a round figure—$10,000. What would that grow to 25 years from now if invested in a good mutual fund? Now, juxtapose that number with the increase in the cost of a funeral over that time. The average inflation rate of consumer-purchased items is around 4 percent. On average, funeral costs have risen about 4 percent a year. By comparison, invested money would grow at 10 or 12 percent in a good mutual fund.

Now understand, I’m not knocking the funeral business. But lots of businesses that provide these services realize more margin in selling prepaid policies than in caskets.

Do you understand my reasoning? If we knew the exact date she prepaid, and how much she prepaid, that figure invested in a good mutual fund would be a lot more than the cost of a reasonable funeral. It’s the same principle I advise folks to not prepay college, or just about anything else, that’s far into the future. The money you could’ve made on the investment is a lot more than the value of prepaying. Preplanning, on the other hand, is a great idea for many things— including funerals.

I’m truly sorry for your loss, Rebecca. God bless you all.

—Dave

In 2008, the cost of the average employer-sponsored family plan was $12,680, with an employee share of $3,354. The 2016 cost topped out at $18,142, with a $5,277 employee cost. In the individual market, the biggest losers are those who earn a little too much to qualify for federal premium subsidies, particularly the self-employed in their 50s and 60s. For a bronze-level plan with a health savings account, a three-person family can pay $15,000 a year in premiums and paid out-of-pocket for the first $6,550 of medical expenses for each family member.

Moreover, many insurers have requested—and will likely receive— double-digit premium increases for 2018. Nationally, the increases between 2017 and 2018 for unsubsidized premiums for the lowest-cost bronze plan averaged 17 percent, the lowest-cost silver plan averaged 32 percent, and the lowest-cost gold plan averaged18 percent.

“We’ll start by increasing competition in the insurance industry”: That was a colossal failure. Overall, the number of insurers in the individual market has decreased since 2014. In 2017, UnitedHealth Group eliminated ACA Exchange plans in 31 of 34 states, and Aetna remains in only four states.

Humana and Aetna plan to exit all ACA Exchanges in 2018.

Agreed, some Americans gained health coverage. Medicaid and the Children’s Health Insurance Program (CHIP) accounted for 14.5 million of the 20 million of newly covered. The 2014 cost per non-disabled adult and child enrollee was $3,955 and $2,602, respectively. Some 27.5 million people remain uninsured, with cost cited as the main problem.

Further, being “covered” was meant to keep emergency departments from being used as an alternative to primary care. But according to the federal Agency for Healthcare Research and Quality, the number of emergency department visits covered by Medicaid increased by 66.4 percent between 2006 and 2014, outpacing population growth by a factor of two, making Medicaid the leading payer for emergency department visits.

These data tell us we must have a serious conversation, not intellectually lazy political slogans, like “Repeal and Replace!” Instead of ruminating about how to modify the government’s involvement in medical care, Congress and policymakers should ask how can we take better care of more patients and be open to all suggestions.

One successful model is direct primary care, mainly seen in solo and small medical practices. Here, patients pay a monthly fee (generally ranging from $75 to $150) directly to the physician’s office for 24/7 access, and in many cases, basic labs and medications, and steep discounts on radiology and pathology services. Also growing are direct pay specialty and surgical practices where the fees for the operating room, surgeon, and anesthesiologist are included in one low price. And yes, many of these practices offer sliding scales and charity care without running afoul of rigid federal regulations.

With direct primary care, patients spend more quality time with their doctors and physicians, who can shed the administrative burdens of government programs and insurance companies and treat patients according to their best judgment. A testament to the success of this model is the University of Michigan offering such a program this spring. Hopefully, the big boys won’t ruin a good thing.

ObamaCare’s individual mandate is dead. It’s time to use our health-care dollars wisely and pay for the medical care, not the middlemen.

ABOUT THE WRITER → Dr. Marilyn M. Singleton is a board-certified anesthesiologist and Association of American Physicians and Surgeons board member. She graduated from Stanford and earned her medical degree at University of California at San Francisco Medical School, completed two years of surgery residency at UCSF, then her anesthesia residency at Harvard’s Beth Israel Hospital.