Choosing to Go Without Health Insurance

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Has health care finally reached the breaking point? Apparently the number of people choosing to go without health insurance is growing. Should that surprise anyone? It’s actually a rational strategy when the cost reaches the point of being unsustainable. If we haven’t already reached that point, we’re dangerously close.

Choosing to Go Without Health Insurance
Choosing to Go Without Health Insurance

Fortune published a disturbing article on the last day of 2018 that speaks volumes of the current state of American health care. What Americans Taught Us About ‘Risking It’ Without Insurance in 2018 started with this ominous declaration:

“For many Americans, 2018 was the year that health care reached a breaking point. Insurance was still too expensive to buy. It didn’t cover nearly enough.”

I can attest to that last point. In 2017 I had my appendix removed. The total cost was over $25,000. I had to pay over $5,000 of that out of pocket – even with health insurance in place.

Steep out-of-pocket costs are the second threat of the health care/health insurance crisis. Absurdly high premiums are the first. Seeing people go without coverage does become logical at some point. We should suspect many millions more will do the same when the next recession hits, and job losses begin piling up.

“War Stories” from the Article

The writers of this article spent time interviewing people who are forced to go without health insurance. They culled the specific stories from more than 5,000 responses they received to the question.

Here were some of the scenarios:

  • A family in Virginia filed for bankruptcy, even though they had health insurance. This can probably be attributed to absurdly high out-of-pocket costs that are now common with policies.
  • Another family in Texas was forced to insure some members of the household, while excluding others. This was their strategy to minimize the premiums.
  • A nurse who maintains health insurance every other year, scheduling any needed tests or exams for the years when she’s covered.
  • A 79-year old retiree continues working to provide health insurance for his 61-year old wife, who is not yet eligible for Medicare.
  • Many individuals, couples and families simply went without coverage, in favor of paying other expenses deemed more immediate or important.

Each of these cases paints a picture of an individual, couple, or household who are engaging in self-rationing of health care, a topic I’ve written on in the past. Realizing that it’s become impossible to provide coverage for everyone in the household, 100% of the time, people are making trade-offs so that some members of the household can have coverage at least some of the time.

You don’t have to think too hard to imagine yourself being in any one of these situations. That’s what makes the prospect of going without health insurance so frightening. But it’s precisely because the potential is so catastrophic that we need to consider it. And to come up with some workable strategies in advance.

Most Americans are One Job Loss Away from a Similar Fate

According to the US Census Bureau, 56% of Americans are covered by employer sponsored health plans. The rest are covered by Medicaid, Medicare, direct-purchase coverage (presumably Obamacare) or military coverage. (The same report indicated 28.5 million people, or 8.8% of the population have no coverage at all.)

56% translates to 155 million people. Now the way the current health insurance system is set up, employer sponsored coverage is the best of all worlds, short of a government plan, like Medicare (plus a good supplement) or the VA. That is, as long as the employer sponsored coverage is heavily subsidized by the employer.

But the flip side of that silver lining is that retaining a job has become more important than ever. If you have employer sponsored coverage, it’s not just a matter of the loss of income, but also of health insurance.

Many millions of people understand that dilemma. That’s what keeps them from changing jobs, quitting jobs they hate, or leaving to become self-employed. The prospect of losing a job, and the health insurance that comes with it, keeps people from moving on in life.

It’s one of the major reasons Americans are increasingly turning into trained ponies, rather than the bucking broncos that built this country into the richest nation on earth.

COBRA and ACA Plans are Not Workable Solutions

Let’s start with COBRA, since that’s usually the first consideration after the loss of a job.

When my wife lost her job in the middle of 2017, we went on the COBRA plan for the second half of the year. The premium was a staggering $1,875 per month. That was much higher than our house payment, and would likely be even higher now.

What many don’t understand about COBRA is that it represents the unsubsidized premium on your employer health insurance. That means if the actual cost of the premium is $1,500, but your employer pays 60%, your portion will be a relatively affordable $600 per month.

But lose your job, and the entire premium is on you. And that’s not all. The plan administrator can add up to 15% to the premium as an administrative fee. That means your actual COBRA payment will be $1,725 per month. Imagine trying to afford that payment when you’re unemployed?!?!

What about ACA plans?

I ran a scenario on the ACA plan estimator site to get some premium quotes. The fictitious profile is of a 40-year old couple with two dependent children, and an annual income of $80,000, living in the Atlanta metropolitan area. This is what turned up:

33 plans came up, some with lower premiums. The cheapest had a monthly premium of $245, but it also had a deductible of $13,500. That kind of deductible is unacceptably high, particularly if one of the breadwinners is unemployed. In today’s high cost healthcare universe, reaching $13,500 isn’t even hard.

But even though the plan in the screenshot has a deductible of only $2,000, the monthly premium is $823. That’s nearly $10,000 per year.

But look to the right of the deductible, where it references $12,700 for the out-of-pocket maximum. This number should never be ignored. It reflects a 20% coinsurance provision. That’s the part of a medical bill that will be your responsibility over and above the deductible.

So taking my example earlier of my appendix removal at $25,000, if I had this plan, I’d pay $2,000 for the deductible. I’d then be responsible for 20% of the remaining $23,000. That would add $4,600 to the bill, bringing my total out of pocket for a single surgery to $6,600. And that’s on top of the $10,000 annual premium.

The bottom line is that neither COBRA nor ACA are workable solutions if you lose your job.

Unfortunately, there are no simple solutions to this problem. That’s because it’s a system, and a largely failed system at that.

Choosing to Go Without Health Insurance – Are there Alternatives?

As much as I’d love to say there’s a super-secret solution to this problem, there isn’t. There are strategies, but each requires accepting trade-offs.

Here’s a short list:

  • Get a job just for health insurance. Maybe you were making $50,000 and had health insurance. But maybe the best you can do for now is a $25,000 job, with health insurance. It may be worth grabbing in a pinch.
  • Get a part-time job with health insurance. Please don’t dismiss this out-of-hand. It was how my family kept coverage for over two years. It may be critical in an extended unemployment situation.
  • Christian health sharing ministries. Not true health insurance, but it works much the same way at about half the price. Limitations: 1) you must be a practicing Christian and 2) in good health to qualify. But if you are, it’s worth a shot. Popular providers include Medi-Share, Liberty Healthshare and Samaritan Ministries.
  • Take the ACA plan with the cheapest premium. In the previous section, I gave an example of an ACA policy with a monthly premium of $245 and a deductible of $13,500. Take that plan, and pray nothing bad happens. And if it does, at least it will provide coverage for a truly catastrophic medical event.
  • Go without coverage. This should be a last resort, but I suspect that’s what most people do. You’ll have to take extra good care of your health, avoid dangerous or unhealthy behaviors, and keep a well-stocked emergency fund to cover at least minor medical events.

Again, none of these strategies are perfect. But with the current state of health insurance, there are no perfect plans.

Do you have a strategy in place in case you lose your coverage?

( Photo by shawncampbell )

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16 Responses to Choosing to Go Without Health Insurance

  1. Bad suggestion Irene! We live within 200 miles of the border. We talk about it all the time. I’m beginning to think my son and his girlfriend might actually do it. We’re tentatively planning to go to Ontario in June, so we might be scoping things out while we’re there. Heck, we’re already in Northern New England, so we’re well acquainted with freezing! I saw a recent article that said Canada is welcoming entrepreneurs, plus my partner on this site is based in Alberta. We’re hockey fans and Heartland is one of our favorite shows. It’s sad that the whole idea of relocating to another country should be a consideration, given that for centuries America was THE destination for the disenfranchised. Now there’s a growing phenomenon of the well-to-do expatriating. If you live long enough, everything changes, even things you once thought to be permanent fixtures.

    Seriously though, what’s really troubling me is there seems to be no consensus as to what to do about this, the most costly healthcare system in the world. The public is even completely scattered on it, and there’s no one leading a movement. What ever happened to the “radical elements” that were the driving force behind so much of the problem solving in this country? Are we so content or distracted that we’re also disconnected???(???) In France, they’re holding nationwide marches. Here we watch TV and pretend everything’s great while suffering in silence.

    Ironically, while writing this response a Trump ad just came across on YouTube. It was a 30 second spot asking us to sign a petition of support and to send money to support the 2020 election. No mention of his platform or how he’s going to fix healthcare or anything else. I’m not faulting him on this specifically, but this has become symptomatic of the political system. They talk of generalities, but offer no concrete solutions. It’s like we’ve lost our way, and nobody sees it. Uggghhh!

  2. My COBRA ends at the end of this month, in which my premium was $400/mo, $5,000 max out of pocket and a $250.00 deductible. It was great while I had it. Now, in the county I live in, there are only three plans from one carrier: Blue Shield. The cheapest I can get is $1,025/mo with a $6,000 deductible and max $6,000 out of pocket. I can’t afford it and will put as much away each month for medical expenses and pray nothing happens. I’m 59, in good health, have a desk job (self-employed) and have a conservative lifestyle. I live about two hours from Los Algadones, Mexico and can buy my meds there for 1/16th of the cash price in the USA. What has our country come to and what is the landscape (health) going to look like in 10 years? Sad.

  3. That’s the very definition of sticker shock! You must have had a great plan, because I haven’t seen one that generous in years. This has become an even more serious problem for 1) people over 50 (the private plans can increase the premium for age, and they do in a serious way), and 2) for the self-employed. I’m blessed that my wife has been carrying the health insurance through a succession of jobs over the past dozen years or so. But if that ever comes to an end, our little healthcare nirvana will come to an abrupt end. We’re both over 50 and I’m self-employed. That’s a bad combination these days.

    In addition to people leaving the US to find a better life, it’s also ironic that you can get the same meds across the border for a tiny fraction of what they cost here. We talk about capitalism here – and I hope to Heaven most people realize we don’t actually have it – but in a true capitalistic society prices would come down. Instead we have these monopolies and quasi-monopolies, working with the blessing of the government, driving up prices and profits. It’s the very definition of a no-win situation.

  4. Interestingly our church had a guest speaker this last Sunday, and he had spoken in several third world countries, where not only was health insurance unavailable, but even medical help wasn’t available. As a missionary to these countries, thousands of people showed up a day early just for prayer for their illnesses. I thought back to my earlier days with my children, and before mandatory health care, there were times, we had no health care because I wasn’t able to afford it, and I prayed daily that all would be well, and it was, but I see the countless individuals now with life threatening problems, and their problems seems insurmountable. I can’t imagine living without health care now, but wonder if my faith has lessened, compared to when I and my family did not have health care. In my earlier years, as a self employed sub contractor, it was all I could do to make ends meet. It is a real problem today and with a physician son now, I’m torn to find an answer also for those unable to afford it.

  5. Hi Gary – I think it is true that the closer we are to oblivion, the closer we draw to God. The opposite is probably also true. I heard a story in church some years ago of a Christian minister in Ghana saying to an American minister “my God is bigger than your God”. That sounds like semantics but I got it immediately. People in Ghana and other places don’t have what we have here in the way of support structures. Their reliance on God is greater, and thus God is “bigger”.

    For myself, I’ve lived long enough and seen enough crap and experienced enough blessings that I feel like my life is a living example of James 1:17 (“every good and perfect gift comes from above”). I often feel protected from above and see so many examples of how a person with my limitations has landed in a much better place in life than I ever imagined. But at the same time I’m aware that from a human standpoint it all hangs by a thread. But if that thread is a safety line from above it’s strong enough to rely on. When I count my blessings, which I do frequently to keep centered, I’m in awe. That we have problems and limitations is part of life. But the intervention from the Creator of the Universe in the midst of those problems is a true miracle, and the real story. Some might think I’m a religious nut job, but I know what I’m experiencing. Hearing similar stories from other believers makes me realize I’m not wrestling with insanity.

    (Stepping down from the pulpit…)

    But getting back to the subject at hand, I don’t see a fix for this until the system crashes (from lack of funding) and we’re forced to give a few things up to make it work better. After all, it does little good to have “the best healthcare in the world” (or so we’re always told) if you can’t afford to pay for it.

  6. What a timely article! I’ve commented here before about our situation, but it is exactly as you describe above. My husband is retiring at 63 because he can no longer keep up with the technology of the software he writes (robotics/automation for large-scale kilns and furnaces). He does not qualify for medicare until 65, so we have 2 years of no health insurance since we are covered under his current plan and I am self employed.

    I have researched until my head was ready to explode and the cheapest I could find was $1,000/mo with a $15,000 deductible. We cannot afford this. We have flirted with the idea of going without health insurance for those two years, but at our age (62 and 56), it is very risky. We had high hopes for short term plans since this administration now allows them to last for 12 months and to renew for 2 years at a time, but we are still researching that option, as there are many limitations, including pre-existing conditions not covered, and maternity care, mental health issues, and prescription drugs not covered as well.

    We are still undecided at this point, but I am leaning toward going without and saving as much money as possible to be used for healthcare. We also just opened an HSA. We can contribute up to $9,000 per year to this, so we are contributing the max this year before my husband retires and then using that to pay for either health insurance premiums for the first 6-9 months or use it for medical issues and forego insurance.

    If only someone in our corrupt government would address this once and for all, but it’s a battle between the Dems who seem to love this crappy Obamacare and the Repubs who don’t seem to want to repeal and replace. They’ve had two years and have done nothing and come up with nothing. Just pathetic.

  7. Hi Linda – I remember you writing about this before, and get why you still don’t have any solid answers (there aren’t any!). Have you priced COBRA coverage? It’ll buy you 18 months, but it’s expensive too. Or how about your husband only semi-retiring? Maybe he can work part-time for his employer and keep coverage. Maybe even work just enough to pay for the premiums. Those are just random suggestions.

    A friend sent an email on this article, and suggested an expansion of Medicare as a solution. I think that may happen but it may be stripped down, like a Medicare/Medicaid hybrid. If it does happen, or any other universal plan, it’s not likely for a few years. It’ll have to be a primary issue in the 2020 election. After that, if it’s approved, it’ll take several years to implement. My guess it’ll be phase in, and maybe fully in place by 2025 or later. By then, some of us will already be on it. But it could be a long-term solution for our kids. Something needs to happen, but there doesn’t seem to be any groundswell on it. The Democrats are too wrapped up attacking Trump, and the Republicans are in “let’s pretend there’s no problem here” mode. That’s why we have to talk about individual strategies.

  8. Linda, Affordable Care Act (ACA) — the misnomer for Obamacare — does cover pre-existing conditions. https://www.hhs.gov/answers/affordable-care-act/can-i-get-coverage-if-i-have-a-pre-existing-condition/index.html

    HSAs have their pros and cons. For one thing, you would have to have two separate accounts — one for you, one for your husband. You cannot use a joint account. https://apps.irs.gov/app/vita/content/37/37_04_005.jsp?level=basic

    I feel your pain, because my husband and I are in a similar age range and situation. ACA proved to be the best option for us, choosing a low premium/no premium option with a very high deductible/out of pocket max, as suggested by Kevin. This year, that deductible/ out of pocet max is $14,700 in most Counties in PA, for two adults over age 50 — both non-smokers.

    The caveat is that, if your income exceeds 4 times the poverty rate for our household size, the premium subsidy disappears. If that were to happen, in our example, our montly premium would exceed $1,750 for what’s actually a catastrophic care plan.

    So what we have here in America is a situation where people like us have to either limit our income below the arbitrary threshold — to avoid having to pay an addiional $20-$30K in health insurance premiums — or go without health insurance if we’re in that huge donut hole between the ACA subsidy income threshold and the much higher income level where the break-even point occurs.

    The problem is especially acute for Americans with high housing costs, who require a minimum level of annual income close to or above the ACA subidy threshold. They cannot keep a roof over their heads with an income below 4 times the poverty rate (a modest middle class income in most of the U.S.). But they cannot afford to pay what amounts to a second motgage payment (or even higher) just for health insurance premiums.

    Getting back to over-50 insurance for couples — for the plans with lower deductibles — but the SAME out of pocket max as plans with high deductibles — monthly premiums range from $2,200-$2,600 per MONTH. With a subsidy, those monthly premiums are lower — around $350 to $800 month — but, when you do the math, it still makes no sense to pay higher premiums for the same out of pocket max.

    Depending on your employment situation, health care premiums may be tax deductible. But it’s complicated. https://www.verywellhealth.com/are-my-health-insurance-premiums-tax-deductible-3972883

    My head hurts just trying to make sense of it.

  9. Good points Deborah. I’ve crunched the numbers on high premium/low out-of-pocket and low premium/high out-of-pocket, and it always comes out to roughly the same annual cost if you have even one moderate or major health event. And when you’re over 50, you have to assume that. Probably the best strategy is to go with the lowest premium, sock away money to cover the out-of-pocket max, then pray nothing happens.

    Also you’re point about the name AFFORDABLE Car Act struck a nerve in me. The whole purpose of the ACA was to keep the healthcare gravy train running, not to make it truly affordable. It reminds me of the “USA Patriot Act”. The net result of that act was to strip away personal liberty, but it was sold as a patriotic act to keep us safe. As George Orwell referred to this as doublespeak, which is the strategy of putting a pleasant sounding label on something that actually refers to the exact opposite. It adds insult to injury that health insurance has skyrocketed since the passage of the AFFORDABLE Care Act. Do we need any more proof that deception is a preferred strategy? Of course, had it been properly labeled the “Health Insurance Gravy Train Continuance Act” it never would have passed.

  10. Try finding an herbal healer. Very affordable and fixes the imbalances instead of drugs that mask the symptoms and make you worse. They dont advertise and are hard to find,so you have to ask around. It works.

  11. Hi Phil – My sense is that as this healthcare crisis continues to deteriorate, there are going to be a lot more home remedies and alternative health strategies. At this point, they’re worth experimenting with. My wife and I are on some meds and we’ve learned that none are harmless. They all have side effects that lower your quality of life. The point being, even the officially sanctioned treatments aren’t harmless. You wouldn’t know that from watching all the miracle med commercials on TV, but that’s the reality. But then TV and reality should never be uttered in the same sentence.

  12. Deborah, thanks for the info! My head is spinning and from the sounds of it, there is not any one good or sound solution. One thing I do know: if the ACA is so wonderful, why did Congress exempt themselves from it? If it was working so well for the middle class, why can none of us afford it? I’m glad it helps the less fortunate, but in doing so it has destroyed those of us who make too much to receive subsidies.

    Kevin, don’t even get me started on the Patriot Act! Ugh–I was really hoping that things could turn around under Trump (drain the swamp, right?), but that’s looking more dismal by the day. I don’t believe any one person can turn things around if the remaining officials want the status quo…

  13. Hi Linda – Very true, no one person can turn things around. In days of old, the people sacked the king/queen, then things changed. Today we’re governed by a system that doesn’t change no matter who’s in the WH or which party controls congress. That’s why I’ve increasingly become non-political, viewing and commenting on it more like a trip to the zoo than as a serious human institution. That’s why I always say we’re on our own. Not comforting, I know, but reality seldom is. I prefer reality, with all its unpleasantness, to all the games of “let’s pretend”. When you start viewing life that way, you start seeing things you never did before.

  14. My partner lost his job at 64. Between severance and unemployment, he was able to get by until he was Medicare eligible. He got a fantastic Medicare Advantage plan with United Healthcare which covered almost every thing but a few minor expenses when he fell in our house and suffered an extreme injury which took a year to recover from. 2 years later my company closed and at age 58 I ended up buying an Obamacare plan with a 75% subsidy. At tax filing time, I was forced to repay all of that subsidy because of an error in their formula (contradicted what was on their website) which I pointed out to them but they wouldn’t acknowledge. Needless to say, I cancelled that policy. They transferred my info to my state who signed me up for Medicaid. I was eligible for it for that year, but the following year I knew that I would exceed the income level and tried to cancel Medicaid, but it took 2 years to get that done. The best Obamacare policy I could find was $0 premium with a $12,000 deductible and $12,000 out-of-pocket max. So, I am without insurance for the next 2.5 years until I am Medicare eligible or until I find a job with benefits, which appears unlikely. It’s very scary, especially on days like today when our driveway is a sheet of ice and the newspaper is all the way down the driveway and the dog doesn’t want to walk on the crunchy snow in the back yard.
    Kevin, thank you for your very thoughtful and informative writings – you give us hope!

  15. You’re welcome Sara, but I don’t think I’m giving too much hope on this topic, mainly because the options are all deficient. But what this article does do is give us a chance to air our grievances, given that there aren’t too many places where our thoughts will be entertained.

    What you’re pointing out about the Obamacare “errors” is a theme I’ve heard and continue to hear. I don’t think it’s mass hysteria or bias either. When I delved into for my family four years ago I was overwhelmed by the complexity. I discussed it with my wife and kids and they all agreed it was squirrelly and not to be trusted. We opted against it. It was 1) difficult to understand (and I’m pretty good at analyzing technical stuff), 2) exposed us to too much liability, 3) required us to report volumes of information each year we’d be in the plan, 4) no one we called at the exchange seemed certain of anything, and 5) it didn’t look like we’d benefit from the tax subsidy. That meant it was prohibitively expensive, even with absurdly high deductibles.

    I hope we don’t end up with that coverage, but we’ve got a few years before we’re eligible for Medicare and going without coverage is way too risky.

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