The Health Care Bill That Arrives Before You Can Save for Retirement

“As in all successful ventures, the foundation of a good retirement is planning .”

~ Earl Nightingale

You can have the best retirement strategy in the world, but it won’t do much good if your health insurance premiums swallow your savings first. (Source: Shutterstock)

Note from Addison: Today we continue a series we’ve been calling “Financial Reckoning and the Trifecta Solution.” It’s perhaps entertaining enough to parse the debt crisis that’s been festering our entire adult lives. But we thought we’d venture a few solutions, too. Not that the political status quo is going to change on Capitol Hill any time soon.

If you purchase your own health insurance, the premium comes out of your bank account before you’ve paid for groceries, housing or retirement savings.

The Trifecta Solution document describes self-employed workers facing monthly premiums ranging from $500 to more than $1,500, sometimes with deductibles exceeding $5,000.

Those are figures presented in the proposal, not a universal price schedule for every household.

But the payments are familiar to anyone who buys coverage without an employer’s contribution.

The insurer expects its premium.

The hospital and physician expect payment for covered services.

And when you receive a prescription, the pharmacy charges according to the terms governing the transaction.

The Pharmacy Benefit Agreement

The Trifecta identifies pharmacy benefit managers as one area legislators could examine.

Its proposal would restrict certain rebate arrangements between pharmaceutical manufacturers and intermediaries and require that more of the negotiated discounts be passed through to public programs or consumers.

The same document proposes changes to practices that can prolong pharmaceutical exclusivity, with the aim of increasing competition from generic medicines.

Those are legislative proposals. The source doesn’t include a completed reform showing precisely how much a patient saved at the pharmacy counter.

Congress would have to establish new rules, determine which practices were prohibited and decide who would receive any resulting savings.

The difference between a lower patient payment and a lower federal expenditure matters.

If a patient spends less for a prescription, that money remains available in the household budget.

If Medicare spends less, the federal government may reduce its expenditure.

Neither saving automatically becomes capital in a sovereign wealth fund.

The Public Health Care Account

The Trifecta Solution proposes universal health care financed through a combination of existing health care spending, cost reductions, and income from public assets.

It suggests a state-first rollout and a dedicated health care wealth fund.

America can put a man on the moon, build the world’s biggest technology companies and spend hundreds of billions chasing AI advancements. But providing universal health care remains an unfinished project. (Source: OECD)

Its objective is to replace private premiums and out-of-pocket payments with public coverage, eventually eliminating premiums, deductibles, and copayments.

But the proposal doesn’t provide a complete state health care budget demonstrating that the new revenues would cover all claims.

The state would need authority to receive and use the necessary federal funds. Legislators would have to establish eligibility, benefits, provider payments and the funding structure.

Its proposed public wealth fund would also need assets before it could distribute investment income.

The document’s eight-year self-sufficiency goal remains a projection, not a demonstrated result.

The Research Laboratory

Health care costs are also connected to the investment decisions described in our original research.

Strategic Fortunes chief strategist Ian King identified the collaboration between Nvidia (NVDA) and Eli Lilly (LLY) involving up to $1 billion over five years in AI-related research.

Silicon Valley gets most of the attention, but some of the most consequential AI investments are happening in health care research. Technology companies and pharmaceutical giants are collaborating to bring more computing power into the drug-development process. (Source: Tech:NYC)

He also pointed to U.S. Food and Drug Administration (FDA) plans involving computational models and a software provider whose customers, according to the figures presented, were associated with at least 90% of newly approved drugs from 2014 to 2025.

Those figures supported an investment argument about a company selling technology to pharmaceutical developers.

They did not establish how much the Trifecta’s health care plan would save.

We wouldn’t use the investment opportunity as a substitute for the missing health care budget.

A drug developer may pay for research software. A patient or insurer may later pay for a medicine. A public program may pay a portion of the medical bill.

Those are different transactions, with different people receiving the money.

If you are paying $1,500 a month for your own insurance, the amount you retain after any reform will depend on which payments actually disappear and which obligations replace them.

The proposal promises relief. Congress would have to decimate the ranks of the lobbyist class to get anything other than graft out of the healthcare system.

~ Addison

P.S. Historians recognize turning points in the rearview mirror. You only recognize them in the rearview mirror. But between a shake-up in Washington, the AI boom and a restless stock market, I’d say we’re standing at one right now, and November 16 could be when it comes into focus.

As a result, Ian King, Money & Markets chief investment strategist Adam O’Dell and I have joined forces for the first time in The Alliance.

Together, we’ve built the 12-position Final Reckoning Portfolio to help you get ready before November 16 and through what comes after, with weekly updates, alerts and fresh ideas from all three of us. Learn more here.