Having Health Insurance Just Might Not Matter
Phil Gaimon was a professional road cyclist at the highest level, and retired from the sport in 2017. Cyclists in America aren’t superstars like they are in Europe, so even though they can make a decent living while racing under contract, retirement is another matter.
Gaimon started forging his own path in retirement and breaking new ground using the modern tools of social media, along with branding and sponsorships. He started a YouTube channel and called it “the worst retirement ever“, where he made videos documenting his comical attempts at breaking records on famous hills climbs or feats of cycling. I was a huge fan and loved the fact that he was utilizing modern tools to show a new way to earn income for retired pros.
Then in 2019 he got a call from the track coach of the U.S. Olympic Team asking for his help in the upcoming Tokyo games. Gaimon jumped at the chance to participate in the Olympics. But a brutal crash at a training race in Pennsylvania ended his dreams, and started his nightmare.
The Damage
Gaimon broke his shoulder blade, fractured his collarbone, broke five ribs, and partially collapsed his lung. Yes, bike racing is a dangerous sport. He immediately had surgery on his collarbone in Pennsylvania, but then had to go to New York to get a specialist to operate on his shoulder blade.
When it was all done, we know what happens next. The bills start rolling in. Gaimon had two health insurance plans – one from the ACA provided by the California exchange, and another from U.S.A. Cycling.
Not one, but two health insurance plans. So he should be pretty good to go right? Gaimon owes $151,803.69 to one provider and $49,526 to another for a grand total of $201,329.
Two hundred thousand dollars… I wonder if he can put that on his travel rewards card?
Go Back To Your Own State
How could this happen? He “was out of network” for the first surgery in Pennsylvania – of which he had no choice since he was whisked away in an ambulance and immediately operated on.
And the second surgery, in which the doctors in Pennsylvania told them he needed but could not do, was deemed “elective”. Oh and he was charged $25,000 for a night in the ICU when he was told it was only because space was lacking elsewhere.
I could go on but if you want to read the full story or listen to a short 6 minute audio clip about his situation you can do so here.
It’s Scary Out There
I’m not doing this post to get deep into the weeds about the mess that is health insurance in America. We all agree it’s a mess.
And I’m definitely not going to open up the gates to arguments as to how to fix it as those debates are intricately tied to politics which will bring out the online bullies and hate mongers. That toxic shit ain’t allowed on my blog.
But I do want to highlight stories like this because, well, they’re scary. And we who seek to retire early need to know what can happen, more accurately what is happening.
Just as it’s important to read about the big stock market crashes of the past so you have a full understanding of what could happen to your portfolio, you need to read about these horrific healthcare bill stories to understand what could happen to you. Preparation is everything, and it starts with knowledge and awareness of the risks.
Because you don’t want to be this guy who was facing a $524,600 bill for kidney dialysis even though he had health insurance. It was only canceled after he got it highlighted on NPR and journalists started going after the insurance company. But everyone doesn’t have the luxury of having their ridiculous billing case highlighted in national media.
No Transparency
Recently the blogger SteveArk did a post detailing his experience with a surgery, one that in the end he was fully covered for. But the cost of the surgery as claimed by the provider was a ridiculous $250,000. Yes, a quarter of a million dollars.
As Steve said, there’s no way in hell his procedure costs that much, and as we all know there’s zero transparency in our system. Healthcare is the only thing that I can think of that you have to buy in our country without knowing the cost beforehand.
I wrote a post way back in 2018 detailing my simple routine knee surgery. The doctor was inside of my knee for maybe 10 minutes. The cost? Over $12,000. And I kept getting threatening and cryptic quasi-bills from my health insurance company for months that claimed I owed thousands.
Some Hope?
In 2020 Congress passed legislation preventing the ridiculous out of state emergency billing that happened in Gaimons case. It doesn’t go into effect until next year, and that’s too late to help Gaimon.
And as noted in the story I linked to above, he still gets 4 or 5 calls from collection agencies every day.
While this new legislation may be a small step forward, what other hidden idiotic loopholes and bad policy are in our health insurance plans? There are surely landmines out there waiting to be stepped on.
As Investopedia points out, 66.5% of bankruptcies in America in 2019 were from being unable to pay medical bills. It’s the #1 reason for bankruptcy ahead of job loss and divorce.
So in the end, what’s clear is that in some respects it really doesn’t matter if you have health insurance. Because when you need it most it might not be there for you.
Great points Dave!
Isn’t insurance supposed to be about peace of mind and knowing you’re covered? I’m so glad Steve’s surgery went well and he was covered by Medicare. Imagine if you were in some different country and not covered?
Yeah… ‘peace of mind’ is hard to find in this arena, to say the least
These stories but in perspective on why it is so important to have a rainy day fund. While most will not be large enough to cover the enormously high costs that you detail, they may be enough to cover you while you fight to get insurance to do what you paid them to do.
Thanks for sharing.
Yep, so true. I’d hate to have to use an emergency fund for something that insurance should cover, but it’s there as a life saver
Great post, and its cool to be mentioned in it. When my dad died and I settled his estate with my brother medical bills kept coming in for over a year associated with his care the last few days of his life. We kept paying them without any idea if they were valid or accurate or when we’d be done with all the associated costs. Not only do you not know what something costs but you might get billed a year late! It is such a confusing and complicated mess.
Ugh… so sad. When your post came out I was halfway through mine and thought your example was a great fit to make the point.
All the health insurance premiums I paid over the years makes me cringe. I wish I could’ve just paid for the miniscule amount of services I actually used. Insurance is not peace of mind when they routinely deny your claims for no good reason.
I’d hate to see a grand total of all the premiums I’ve paid throughout my working life. That would be a scary number
this really is some kind of bullshit busted system. makes me glad retirement assets are largely shielded from bankruptcy. sure, the providers chiseling collection people will try anything to get a person with a denied claim to tap that 401k but they should consult an expert first and tell the collectors to pound sand. “go ahead and make it an even million and c’mon by the hacienda and try and collect! if you’re coming pack a lunch because it’s gonna be along afternoon.”
haha, yeah. I’d add that “I just might have an unpleasant surprise for you at the hacienda, mark the next two days off your calendar as bed rest, trust me”
I love Phil’s channel and watch all his videos, what happened to him is absolutely insane. My single biggest wish (and gift) to you my friends south of the Canuck border is universal health care. Such a basic common good that should be able for all, equally and nearly free, without punitive costs. Here in BC 2 years ago we paid $100/month for the government plan and collectively it was felt that it should be 100% free, it now is. Nationally and Provincially there is a push for pharmacare and universal free basic dental care right now as well. I hope they both become a reality.
Phil’s the man. His episode where he made up with Fabian Cancellara was awesome.
As for universal healthcare, correct me if I’m wrong because I’m not a Canuck, but isn’t it a misnomer to call it “free”? More directly, isn’t it paid for by your taxes, which are much higher than those in America? I’ve just always been curious about this perception that it’s free – because someone is paying for it. Sure, it’s free at the time you go to get care, but you’ve already paid for your care through your income taxes to the government, unless I’m missing something. Again, correct me if I’m wrong or if the Canadian government pays for it’s healthcare using dollars from somewhere else. And as you know I don’t allow politics on the blog so that’s as close as I wanna get to the political side of things – you know I love ya Chris! 🙂
Ugh! What a mess. I haven’t read Steve’s experience with surgery yet. I’ll head over.
I guess we just have to stick around in network and try not to get sick too much.
I’m heading to the hospital today to get a minor surgery. I have no idea how much it’ll cost. Ridiculous.
Good luck Joe, both with the procedure and the inevitable bills!
The healthcare system is truly broken here. I’m glad you highlighted that story. Crazy stuff!! I can remember once going to the ER in my early 20’s with no insurance because of a severe ear ache. I tried riding it out overnight so I could go to one of those low income clinics in the morning. Well I came out of the ER with a $4,000 bill. For what? A look in the ear and two drops. They gave me a prescription for drops and I was off having to go pay more for drops. Few years later in Mexico I got ocean water in my ear. Ear ache. I nervously went to a random hospital I just walked up to in a neighborhood and was seen, treated, and given the ear drops for $20 bucks and I didn’t even have to show my ID!!!
that’s $2000 per drop, sounds logical…. As for the treatment in Mexico I agree that often or even most of the time it’s easier and simple, until you get some fentanyl in your medication… haha
Great article and it’s always good to have this top of mind. Even being an executive in the healthcare space for a good part of my career and being an expert on billing, how to manage care, claims, etc. Even having access to high-powered lawyers to deal with the type of BS you highlight here. Even knowing my current policy inside and out, a heath-related Insurance FUBAR remains my biggest (and only, really) pre-Medicare/early retirement concern. As you point out, things have gotten incrementally better but it still can be a shit-show out there.
So I’m calling you if the shit ever goes down for me like it has for Phil Gaimon in my post. 🙂
Great story and reminder.
The health payment system is broken in the US and I don’t know what the answer is. Insurance based payments don’t seem to work and two of the biggest assaults on my wallet from healthcare have been at the hands of government providers (City of Dallas Ambulance charge and a state medical university grossly overbilling). City sends a non-negotiable four figure ambulance bill and they’ll lien your house if you don’t pay.
Ugh, more scary stories. As Freddy says if any company threatens a lien on my house for an unjustified bill, they better be careful cuz they don’t know who they’re messing with. I can play dirty.
That’s crazy and so sad. Distrust of insurance companies then just sets people and doctors up to lie or embellish when possible. I’ve had a few doctors get creative with their diagnoses just to get things covered without pushback. It’s not ideal, but that’s the perverse incentive that’s been set up when insurance companies love to say no and/or send out bills.
I’ve had doctors hint of that or even joke about it but don’t think they did it. Most docs know what’s going on and how screwed up and even sinister the system is, it would be nice if they took the lead in change. But also many are beholden to big pharma or sometimes even the insurance industry and the monetary benefits those can bring if the game is played correctly.
Stories like this remind me how valuable it would be to understand these loopholes and how to avoid them. I wish there was a stronger focus on this in the FIRE community, but I’m sure there are resources out there I simply haven’t found yet. Sad that it takes so little for a bad accident to wipe out so much hard work. Changing the system would be great, but in the meantime, I suspect gaining the relevant knowledge is the best one can do to help protect oneself from these situations.
I agree, right now as much knowledge as possible is the best defense but it seems like crazy and scary stuff can still hit at any time
Dave,
After major health issues out of the blue that have led to my insurance being billed over $400,000 in the past 2.5 years, I am truly grateful for health insurance. I have always been healthy, but entering my 30s I have had major health issues enter which have hopefully been resolved thanks to surgeries. Knowing that my bills were covered once my deductible and maximum out of pocket was met each year has been a relief. Granted, I always am a stickler for making sure the facilities I go ate in network. The sorry above is harrowing. I do wish for a single payer healthcare system, but until then I am happy to pay my premiums.
Yikes, $400k… sooner or later you’re talking about real money. Relive me I have no problem paying premiums either and have been relatively lucky with health insurance to date, but there just seems to be so many ways these companies scam their customers in unethical and seemingly illegal ways, I’m not a big fan of too much government regulation, but I am happy to see Congress pass that new law I put in my post and I’d like to see more consumer protections put in place in this arena.
There certainly are ways that they scam their customers, which is such a shame. My fiancés policy is asinine when it comes to which doctors are in and out of network.
Published right before Halloween… great time for a horror story Dave! Because that’s what this is. A nightmare in written form, with folks hoping and praying it doesn’t happen to them!
Great post! Healthcare is certainly high on my list of concerns in “retirement”. I can only hope that one of those crazy medical bill situations doesn’t happen to me.
I hope both of us avoid this horror, and better yet that the possibility of horror goes away.
I’m about a month late reading this post, but I have a quick question regarding your friend’s situation. It sounds like he had an ACA policy (as do we). Wouldn’t his exposure limit be his Maximum Out of Pocket policy limit? Usually on all ACA policies this is limited to about $7k-$8k individually (per year). Still a chunk of money, but way better than $500k. Thanks.
Phil Gaimon is not my friend, kind of wish he was thought as he could hep train me to be even faster on the bike 🙂 To your question, those caps don’t apply when you’re out of network and out of state, but that’s prior to the law that Congress passed which as it says in the article goes into effect this next year. There are still loopholes and gaps in that law too – read some of the things I linked to in the post – so it’s still not safe out there.