thanks for calling me boy, been a while since I was referred to as being young. Someone who lives 2.5 hours away and wants to visit multiple times will just need to get a METV, its cheap and will allow them to visit frequently. Thailand has let people, I'm assuming like you with your strange attitude and locked profile, abuse the system for too long.
Most normal tourists aren't travelling to thailand more than twice a year because of work commitments and cost of international holidays, if they want a 3rd visit they would need a tourist visa. This will really only affect people who are trying to live in Thailand year round on visa exemptions, I would imagine its a very small minority of actual tourists who will be affected by this.
How will it not work? Now after your two visa free entries you will need a proper visa. The system has been abused for years and has cost the Thai government millions is potential income from visas. Now if you're genuinely a tourist you can still spend a long time in Thailand without a tourist visa but if like many who abuse it, eventually you're going to need a visa.
I cant offer too much advice as I am not on a retirement visa but I do have a Non O and health insurance currently isn't a requirement for it. Also I wouldn't worry too much about using the Thai banks. I opened up my account with KBank using my initial Non O and had no issues whatsoever. Most of the people, not all but most, who are having issues with the banks are people who opened accounts with banks when they weren't entitled to them and Bangkok Bank customers.