Tag Archives: insurance

Is Paying the Obamacare Tax a Better Choice for the Young and Healthy?

Urgent Update and Correction:

Just as with this article at Business Insider, I missed the fact that enrollment in the exchanges is limited to open enrollment periods.

This does change the risk dynamics of paying the tax rather than buying the insurance.  Any confusion caused by this oversight is regretted.  Even still, those with either few assets to lose or those with sufficient assets to carry them to the next enrollment period, may still want to take the risks as presented in the original post.  The availability of sensible catastrophic true high deductible “real” insurance that Obamacare prohibits and has not been offered in the states would be the answer to this dilemma.

Original Post (with slight unrelated edits):

The following discussion is in no way intended as specific advice as everyone’s situation is different and unique to them, but only as a guide to uninsured young and healthy individuals to understand their choice in whether to buy health insurance on an Obamacare exchange to avoid paying the tax or paying the tax to relieve them of the obligation to purchase the insurance.  The only mandate for the uninsured is to make this choice, not to do one or the other.

The other purpose here is to counter biased government efforts that will insist the only choice is which insurance exchange plan to buy and how to sign up for it, ignoring the possible benefit of paying the tax instead.  This government effort is substantial, as here in Pennsylvania alone, over $6 million of taxpayer money is being directed to one critical thing Obamacare success is dependent on, enrolling as many young and healthy people as possible.  According to Enroll America-Pennsylvania, on July 10, 2013 “health centers in Pennsylvania were awarded a total of $4,196,333 to provide outreach and enrollment assistance.”  They also indicate that an additional $2,071,458 is coming soon to organizations that will act as “Navigators” who will likely never discuss the non-insurance option that is also important for the young and healthy to understand in making their choice.

Young people need to know a few facts of Obamacare at the outset.  Because the law limits charging the old and less healthy more than three times what the young and healthy pay, this shifts more burden to the young.  Offsetting this are premium subsidies to make the insurance choices seem affordable, but as the young advance their careers and their earnings these subsidies fade.  Another important consideration is that shortsighted bureaucrats designed Obamacare to allow no exclusion for previously existing conditions, giving the opportunity to purchase insurance after the onset of a serious illness, even from a hospital bed. Update: Still true, but only if during a subsequent open enrollment period.

The pay-the-tax choice may be useful for young and healthy people who have the discipline to put aside the difference (compared to paying exchange premiums) for their basic normal medical needs, and especially if they then find one of a growing number of physicians offering much lower prices by casting off third party payment for a cash practice.  It must be understood that this choice is not without the risk of an occurrence of a sudden and severe medical condition causing total incapacitation.  This extremely rare event could prevent them from signing up for insurance on an exchange until they are sufficiently recovered to do so.  Update: So long as it is within or until the next open enrollment period.

Putting the sudden-and-severe risk in perspective though is important.  Everyday young healthy people take on huge amounts of student loan debt, with no guarantee of acquiring a job sufficient to easily pay it back, even as student loan debt obligations saddle the borrower for life because  they are not dischargeable in bankruptcy.  Medical debts, on the other hand, can be eliminated through bankruptcy should the highly unlikely occur.  This is where an option to pay the tax and buy a very low cost non-Obamacare compliant policy that pays nothing up to perhaps a $10,000 or even $15,000 deductible, then covers everything above that, would be so useful, but no such thing exists.  Such a plan would be good enough to prevent bankruptcy in most cases and leave substantially less obligation than many young people have willingly taken on with student loans.

It is thus important for young healthy people to see the big picture, understand all their options, then act in their best interest, in reaction to the rules presented to them by the Affordable Care Act.  This discussion has been meant as a guide in starting the navigation of that process.  Additionally, there is a wonderful new resource blog, The Self -Pay Patient, that unfolds a myriad of already available but little known alternatives to insurance, and I highly suggest a visit for anyone serious about learning the many other options available to them, since no government navigator will ever mention any of it.

Note: This post was shared to WatchdogWire

The Argument Against Selling Health Insurance Across State Lines

A popular idea tossed around in the search for effective healthcare/insurance reform is the notion of selling insurance across state lines.   Along with malpractice reform, this often tops the list of solutions, especially from Republicans, even as the main culprit, unnecessary third-party payment, is not even mentioned.  At a recent debate for an open seat in the US House in the district where I live all five GOP candidates spoke in favor of this concept.  Yet is it a good idea or possibly the source of more trouble, and are there other means to attack the existing problem?

On the surface it would seem like a fantastic idea and with good reason.  The argument goes that more competition would bring down prices.  After all, the opportunity to purchase a health plan from a company not doing business in a particular state would now be available.  More importantly, because insurance is separately regulated state by state, it would now be possible to circumvent excessive mandates and regulations that much more dramatically affect price than the number of company choices available.  Both the number of coverage mandates and the nature of them varies greatly from one state to another.  In a few states simply requirements for community rating and guaranteed issue have made the individual market so expensive as to all but destroy it.  In this sense, so long as there are at least three or four company choices anyway, the ability to purchase insurance regulated and approved in another state would change the nature of the competition from one of price to that of determining the least amount of expensive regulation and mandates the buyer felt was needed for their protection.  So far, so good.  What is not to like?

The problem and basis for the argument against what would seem like such a good idea on its surface is the Commerce Clause of the US Constitution, or rather more correctly, the modern perverted interpretation of it.  What began as a provision to facilitate exchange among the states has over time become an excuse for the Federal Government to impose all manner of meddling and micro-management to anything bought or sold across state lines.  The fact that insurance is not bought and sold across state lines should serve as a defense against such federal meddling and against the imposition of Obamacare itself.  In this regard, providing for such interstate commerce would open the door to the legitimate intrusion of the federal government and surrender of the defense that exists without it.

The origin of state control of insurance was the McCarran-Furgeson Act of 1945 which exempted insurance from federal anti-trust laws and left regulation to the states.  Right up to today this has kept federal regulators mostly out of the picture, with the exception being health insurance.  Even there federal intrusions have been few and limited until the passage of Obamacare.  The fact that they went unchallenged by the states was absolutely a mistake by the states, but the extent and nature of the intrusions was of limited scope and never sparked challenges that should have occurred.  Now with the passage of Obamacare the federal government has become the bull in the china shop, seeing no limit to its authority, even though a reasonable defense against it still remains so long as we do not move to purchase across state lines.

Two possible alternative solutions come to mind.  The first makes the most sense and leaves little doubt as to its effectiveness.  Those states that have ruined their health insurance market by excessive and abusive mandates and regulation need to fix their problem internally.  Rolling back that which has caused the problem will eliminate it and do for its citizens exactly what providing the opportunity for circumvention would do.  The second solution is more problematic and questionable.  That would be to possibly keep the federal government out by the formation of compacts among states that want to provide for the purchase of each other’s health insurance plans.  Since compacts must be approved by congress and the internal solution would work as well, this approach would not be suggested.

The bottom line here is that what seems like a great idea to solve a known problem may simply cause even more trouble, give away a reasonable defense, and end up being in the category of “be careful what you wish for”.

Can Covering Preventative Healthcare Services WASTE Money?

As I study and think about the healthcare issue, I’ve had this feeling that one thing simply could not be right.  Proponents of Obamacare have argued, and many Americans seem convinced, that preventative medicine, those checkups, tests and procedures designed to find something wrong can save money by nipping problems in the bud, saving tons of money down the road after a situation has become more serious.  This thinking is so strong that even in high deductible health plans preventative services often do not conform to the deductible and are covered in full or part on a first dollar basis to encourage their use to save others lots of money and reduce premium costs in the long run.  Is this actually a fact or more fallacious nanny state thinking?

Let’s say a checkup does find something wrong, even in someone with no symptoms at the time.  Then what?  When available, treatments would be applied, medications or even surgery would be administered to address the issue.  Yet these treatments themselves are often very expensive and that cost must be spread across all insured.  Whereas, had the condition not been discovered early, by the time the patient experiences symptoms treatment may no longer be an option and expensive end of life treatments may be incurred followed by an early death.  Yet even in this situation, treatments (expenses) that could have prolonged life have not been incurred, and while expensive end of life treatment did occur, it occurs for everyone not experiencing a sudden death sooner or later.  Then too, at the moment of death (which none of us will escape), medical expenses for that individual immediately drop to zero forever.  This all makes avoiding preventative care seem like it could be the cheaper, if even fatal, option.

None of this is to suggest that we do anything to discourage preventative care either, as there isn’t much argument that such steps and discoveries can prolong life, even if at great expense over time.  The point, it seems to me, is that in a society that subscribes to individual liberty what business is it of mine what the next person decides is the right approach for them, especially if it turns out that encouraging greater use of preventative care does not in reality save money as is so often claimed.

Another consideration is that preventative services are at the lower end of what is affordable and as such should never be included in insurance at all.  Doing so defies the purpose of insurance to begin with, that being limiting the risk of encountering the otherwise unaffordable.  Additionally, in a truly free market, with prices mutually agreed by the provider and consumer, preventative services would be the most likely to be heavily discounted as they are gateway transactions.  Any discovery that would require further intervention would often take place at the point of the exam.  This has not been lost on Pep Boys or recently Meineke when they advertise they will diagnose that check engine light in your car for FREE!  Of course in our convoluted system any physician who accepts Medicare or Medicaid would be committing fraud for extending such an offer.

This then leads to the question of what about the poor who want preventative care but may not be able to afford it on their own.  Even here allowing market forces to work is a preferable approach.  Funding Health Savings Accounts to provide for normal health related expenses and allowing participants to eventually keep funds not used encourages wise spending and respects the poor’s discretion and dignity in making their own choices.

Of course the no cost preventative care of eating a balanced diet and exercising regularly is probably the most effective approach in reducing costs aside from direct payment and is not dependent at all on economic status or situation.  Yet here again respect for the liberty of others precludes requirements to exercise or eat a certain diet.  It is simply, although wise, not the business of others in a free society respectful of liberty.

Now you may and should ask if there exist any studies to support my thoughts presented here.  A Google search “does preventative medicine save money” says “yes”.  In fact there are so many sources in agreement that I will simply challenge you to do the search for yourself.  I’ll only note that sources include the New England Journal of Medicine, the Wall Street Journal, and ABC News among others.