ACA, Don’t Go Away: The ACA, FIRE, and Uncertainty

I sat down to write a post about how the ACA — affordable, if not cheap, health insurance — enabled us to retire early, and what its now uncertain future means for our lives and lifestyle. But Dr. Doom already did. Read his post first, then come back here, if desired. Our details are different, but most points of Dr. Doom’s post apply directly to us.

We’re worried about losing access to affordable health insurance, and thus our ability to have our own business and FIRE (in shifting proportions). This lifestyle has another name: freedom. The Republican party has consistently tried to weaken and repeal the ACA legislation since 2010. Those are the facts.

So are these.

Our Situation

  • In mid-2015, my husband and I retired early, at ages 38 and 39.
  • We enrolled in a Blue Cross Blue Shield (BCBS) plan purchased through the Covered California website, our state’s health insurance exchange.
    • Because we voluntarily quit our jobs and were not fired, the insurance company REQUIRED us to purchase our insurance through Covered California. I have never received a satisfactory explanation as to why. BCBS itself sells the exact same plan for the exact same price and, had we been fired, would have sold it to us directly without our needing to use the state exchange. If you think we don’t need the state exchanges the ACA created, because private companies will “just sell” you insurance because of course they’d want to, think again. Wishing doesn’t make it so.
  • We pay $657/month (without subsidy) for a BCBS Bronze PPO plan with an HSA. (An HSA is just a savings account into which pre-tax savings can be deposited. The annual maximum HSA contribution allowed by the IRS, for us, is just over $6,500. Many credit unions offer them.)
  • We have a high deductible plan with a $9,000 annual deductible that, in a normal, healthy, lucky year, we don’t nearly reach.
  • We do not carry dental or vision coverage. We pay out of pocket for annual cleanings and glasses, but we can use our HSA to do so.
  • Our 2015 income was not low enough to qualify us for a subsidy, but our 2016 income will be. We expect to realize some of the $657/month we’ve overpaid as a tax credit/refund for the 2016 tax year.
  • And remember, per the ACA, health insurance premiums for self-employed folks (us) and all dependents are fully deductible on our tax return. This another overlooked, underappreciated aspect of the ACA: It’s awesome for entrepreneurship and driving the growth of small business.
  • We would not have been able to stop working when we did (opening up our jobs for others to take, ahem) without the existence of the ACA. Period.
    • COBRA would have cost us $1,800/month.
    • Similar coverage from a private insurer prior to the enactment of the ACA (which we did look into a few years back, provided they would have actually sold it to us, which is not a given) would have cost almost the same, $1,600/month. Sure, we could work less and run through all of our savings pay for outrageously priced health care, but that’s not the sort of thinking that got us to FIRE, and it sure wouldn’t keep us here for as long as we’d like.
  • The cost of private insurance is only one aspect of this story. The other is about cost control, another woefully underappreciated aspect of the ACA. Insurance premiums go up, right? They rose every single year of our lives, long before the ACA, they rose a little bit this year, and they will rise next year. But! Thanks to the ACA, we are protected from these rises because subsidies rise to cover the difference. As Doom points out, “With private insurance, there is no such guarantee. You are at the mercy of the insurers. If we felt we had to save enough to indefinitely cover indefinitely rising health care costs, we might have been indefinitely working.” Yep.
    • This is just one reason why politicians’ servitude to corporations and their lobbyists is problematic. Corporations want us beholden to and dependent upon them for health insurance. Think about it. These days, health insurance is one of, if not the only, significant advantages they offer over working for yourself. Large corporations have broken the social contract in every other conceivable way: 1) At-will employment means you can be fired at any time for any reason (“or no reason,” as employment paperwork says), so long term employment stability isn’t a perk; 2) They offer no pensions, so you have no incentive to be loyal; 3) They dodge overtime pay laws, etc. etc. Health insurance is all they’ve got to offer, so it stands to reason that corporations would be pretty pissed off at the chinks the ACA made in this last-gasp armor. Their bought-and-paid for representatives have behaved according to plan.
  • In short, the ACA was a key enabler to us finally being able to realize our early retirement and self-employment plans. It’s not perfect, but it’s good, doable, and getting better every year, not worse. This year brought more doctor choices and such, things that made our plan easier to use and more beneficial. Any new product, whether it’s software or a Tesla, a new restaurant or health insurance, tends to improve after its initial release.

In order to continue to not work or, rather, to work less and about as much as we want (this year, that was about 50 hours/month between the two of us) and live frugally (on our usual $32-34,000/year in San Francisco), my husband and I need affordable health care.

President-Elect Trump has promised to “repeal and replace” the ACA, he will be able to do it, and it could really mess up the lives that we have worked very hard to, and been disciplined about, creating. Look. Living on 25-50% of what you make every year, forever, requires at least some discipline and lots of careful, daily choices, even when it’s a solid habit. Having a side job when you’re working 60+ hours week and in grad school part time, just to save a little extra,  doesn’t feel like a real sensible choice when you feel like you could gladly sleep for a year.

But my husband and I chose that. We chose not to buy a LOT of things. And then we chose this. And because this is the U.S., we have this basic, fundamental, possibly archaic and idealistic belief that we should have the basic freedom to live life as we choose. It’s that whole life, liberty, and pursuit of happiness thing. For us, freedom and corporate employment are at odds. Indeed, they are mutually exclusive conditions. We did it, and now we’re done. We hate working in offices. It’s not the President’s job to force us, even indirectly, to work for corporations like his own or those of his kids and friends.

Depending on what actually happens, we’ll probably try to at least stay self-employed, find some sort of coverage, and just work more (an exercise in futility when you don’t NEED to, and would really rather have the work go to other people who do need it, but since our politicians want to create nonsense land now…).

But I digress.

By virtue of living in San Francisco, California, we may have some other options.

California Dreaming

California has a few things going for it, ACA or not:

  • California has the largest economy in the U.S. and the sixth largest in the world. Yes, our state economy is larger than that of most countries. Given this, there is technically no reason we could not have something like Mass Health: Covered California, our state exchange, could provide the foundation for a state-wide health care plan.
    • Note: Starting on Nov. 9, I began to call and email both local and state representatives about this. They have assured me that it is not only possible, but already on their radar given Trump’s election win.
    • I’m not delusional. As it’s currently configured, California replacing federal subsidies would be a stretch, and a huge bite out of our state’s $122.5 billion general fund budget. It’s more likely that California would try to maintain access to coverage (the Covered California marketplace) and consumer protections (lifetime spending caps, fair prices for women, no discrimination based on pre-existing conditions).
    • But California has a strong incentive to have some sort of state-based plan, long term. Remember, people without health insurance are forced to seek care for free in emergency rooms, which are legally obligated to treat them. These hospitals pass the costs on to others, including insured patients, insurance companies and… the state itself.
  • We have Kaiser as a back stop. Kaiser is great for a lot of reasons, but I do not want it. Still, it beats having no health insurance at all. A monthly plan from Kaiser would cost exactly what we pay now, but offer much less. We would be bound to the Kaiser system, the out-of-state coverage sucks and is complicated (and I need out-of-state coverage, given the travel and type of work I do across state lines), and we would have to leave all our doctors and nurse practitioners of 10+ years, which we are loath to do (and do not feel we should be required to do, just because Republicans are feeling destructive).
  • Healthy San Francisco could make a comeback. The city of San Francisco offered universal health care to its residents in the form of Healthy San Francisco, for years before the ACA and Covered California. Since Covered California launched, people who were in Healthy San Francisco and eligible had to get coverage via Covered California instead. Healthy San Francisco still exists, though, for very poor people. Local representatives have assured me that Healthy San Francisco could, if necessary, be spun up to its former glory once again. For what it’s worth, Healthy San Francisco was very well regarded by those who were on it.

Aside: I Miss Old-School Republicans

It’s a pity that Mitt Romney does not take greater credit for all the lives he has saved via Mass Health, the state health plan in Massachusetts. If I were you, Mitt, I’d be singing those saved-life stories from the rooftops (and, to Republicans, would point out how many folks were still able to work and not dependent on taxpayer support because their health problems were treated and controlled).

If Romney had owned that success and the Republicans had taken it up as a mantle of their own, I think the GOP of today would be a completely different party, and one with much broader support and a lot less crazy.

Today’s Republican party, by contrast, no longer even pretends to represent the interests of fiscal sanity, small business owners, entrepreneurs, or folks who actually did what the GOP (used to) say to do. Many Mustachian types have struggled, worked intensely, lived very frugally, and saved our money. Now, however, the Republican party represents large corporations and only certain kinds of wealthy folks: They’ve disowned and shunned the millionaires next door in favor of Wall St. financiers and debt-dependent types like Trump and his ilk. With over $1 million to our names, a paid-off house, and self-employment income still coming in, we consider ourselves well off, but today’s GOP does not.

I miss that old school Republican party, I genuinely do. I’ve been a registered Independent most of my life, aside from a few party-specific registrations required in some states in order to vote in primaries. As a woman with more than a lick of sense, I have voted Democrat much of the time, but not always, especially 15 or so years ago.

In local and state elections at least, I loved that it was often difficult to decide who deserved my vote. Once upon a time, it wasn’t unusual for one or more parties to have one or more really solid, compelling candidates on the ballot, and sometimes I voted Republican. Prior to the great dissolution of actual small government values brought on by Bush II, 9/11, FISA, Homeland Security, and the TSA (I’m still WTF about all that), the Republicans were often strong on privacy and against surveillance; strong on education and unafraid to look and speak intelligently in public (something about a thousand points of light in here); as hunters and farmers, strong on the health of the Great Lakes, wilderness areas, and many aspects of the EPA (I worked on Superfund projects that had tremendous Republican support, for instance); and myriad other things.

It’s not for me to decide what the hell happened to Republicans. I am only sorry it has. They’ve cast their lot.