When Going Without Health Insurance is a Logical Strategy

In the past I stated that bad health insurance is better than no health insurance, and that is a common position in America today. But the limitation is cost. Health insurance is not just expensive, but very expensive. As in, budget-wrecking expensive. For that reason, there may be times when going without health insurance is a logical strategy.

There are several reasons why that’s true.

The Relentless Rise in Health Insurance Premiums

A report cited by PBS revealed that health insurance premiums rose by 196% between 1999 and 2013, which means they roughly doubled.

When Going Without Health Insurance is a Logical Strategy
When Going Without Health Insurance is a Logical Strategy

The article also reported that the average health insurance premium for a family has risen to $16,000 per year, out of which the family contributes $4,565 toward the premium (however if you’re self-employed, you’re on the hook for the entire premium). But let’s keep in mind that these are just statistics. For the plan my wife has through her employer, she must pay about $9,000 toward the cost of the premium each year.

Health insurance premiums aren’t the only component of healthcare that has risen during this century. As a means of cost containment, deductibles have also increased. During that same time span, the deductibles on many plans increased from $500 or $1,000, to $2,000, $4,000, $6,000 and more.

For a family in which health insurance is supplied by an employer and heavily subsidized, the family could be paying well over $10,000 per year in health costs, when you combine the employee paid portion of an employer sponsored plan with a high annual deductible for just one person in the household.

But it gets worse…

The Income Stagnation Squeeze

An article in CNN reported that the Typical American family earned $53,657 last year. The income figure is actually for 2014, which is the most recent figure available (2015 won’t be released until December 2016). The 2014 income actually represents a decline of several hundred dollars from the previous year. What’s more, the article goes on to state that the 2014 figure is below the median household income for both 2007 and 1999.

Both numbers are significant. Because 2007 was the last year before the Great Recession, it confirms that the economy really hasn’t recovered, at least not for the typical American household. But more important, the 1999 number means that the economy has at best stagnated since the beginning of the 21st Century.

That confirms the limited options – and the sense of gloom – that many Americans have about both the economy and the future. But when you combine income stagnation with rising healthcare costs you have the healthcare nuclear nightmare that we now find ourselves in.

My Family’s Own Health Insurance Situation

As I noted above, our health insurance plan is costing about $9,000 per year out-of-pocket. That’s the plan that we have through my wife’s part-time job (yes, there are part-time jobs with health insurance available!). It’s a steep number, and we handle it through a combination of expense allocations and direct contribution from myself and my two kids.

The plan also comes with a $2,000 annual per person deductible. That means that if any one of us were to file a major claim in one year, our total out-of-pocket health care costs would be at least $11,000 ($9,000 were paid contributions, plus the $2,000 deductible).

As health insurance coverage goes, is not a terribly expensive arrangement, relatively speaking of course. But being a Plan B kind of guy, I dare to imagine what we would do if we did not have a plan for my wife’s employer. And the options are not at all good.

First of all, there are no truly private market alternatives when it comes to health insurance. All plans are now under this health insurance umbrella known as Obamacare. And none of those plans are inexpensive, despite the rhetoric that’s being trumpeted by supporters.

If you doubt this, go on HealthCare.gov’s 2016 health insurance plans & prices for individuals and families. There you can get an estimate of what it will cost to get coverage on the health insurance exchanges.

I did, and it was worse than I imagined. Looking at the bronze plans – the cheapest plans available – I came up with a policy covering just muscle my wife with an annual premium of just over $14,000 per year. That was with a $6,000 deductible. That means that in any year in which we would have a major claim, we would pay over $20,000 for health coverage.

And that doesn’t include coverage for our kids; they would each have to get individual plans.
Now I’ll admit that health insurance is more expensive here in New Hampshire that is most of the US. But no matter how you shuffle the numbers, the cost is staggering the matter where you live.
That brings us back to the point of this article.

When Going Without Health Insurance is a Logical Strategy

Breaking it down to basic arithmetic, if the typical US household is earning less than $54,000 per year, and the cost even for an optimist health insurance plan is going to be something around $11,000 per year (based on numbers presented above), then that means that more than 20% of the household’s income will be allocated toward health costs.

In most households, this approximates the amount of income that needs to be devoted to housing. You don’t need a calculator to realize that a household is paying 20% of their income for housing, and another 20% for healthcare, they’ll almost certainly be teetering on the verge of bankruptcy. And in many areas of the country, where both housing and healthcare are much more expensive, the burden will be even greater.

I’m certainly not advocating that anyone who can get relatively reasonably priced health insurance should forgo it. But in many households, keeping health insurance at today’s price levels is a mathematical impossibility.

I’ve offered strategies to deal with this dilemma in the past in the following articles:

These articles list strategies that I hope will help at least some people find reasonably priced health insurance, or find ways to survive without it. But I’ll be the first to admit that there are situations where the only option is going without health insurance.

Nowhere is this more true than with the self-employed, who must bear the full cost of health insurance premiums. The situation can rise to the level of where a household will have to make a choice between housing, food, and maintaining a car – or pay for health insurance.

Millions of people are doing just that right now, despite the promises of Obamacare. There doesn’t seem to be any alternative between the cycle of sometimes covered/sometimes partially covered/sometimes uncovered for millions of people. Meanwhile, the political class – even in this presidential election year – offered no hope for the future.

What’s your take on this issue? Am I being overly pessimistic, or is this really the state of healthcare in the US in the 21st century? And more important, what would you recommend for someone who cannot afford health insurance?

( Photo by Muffet )

6 Responses to When Going Without Health Insurance is a Logical Strategy

  1. Kevin, years ago I use to worry about not being able to afford any insurance of any kind. Of course, car insurance is required if we are going to be responsible drivers. Life insurance, well – never really invested in this. Health insurance I have not had for several years and as I age (now 58) I avoid reading the famous articles about what I should be checking. Bottom line, my Faith has kept me going and that is what I rely on as I journey on my life’s path. I thank God every day for having great health and trust that he will provide me with the means if I ever do need to go for tests. I find myself now listening to Faith based programs and learning more about Faith causing miracles in people that have had cancer and other major ailments. It seems now society is finally paying attention to this option for us as humans. Now I am by no means an expert on all of this, but know from a personal journey that God has kept me well and I no longer worry about not having health insurance. In face this year’s tax return, I did not have to pay the famous Obamacare penalty everyone had me stressed out over/lol. Great topic Kevin and one that is on a lot of people’s minds these days. If we do our part in life (eat healthy, get our rest, exercise, manage stress and pray) – we will remain healthy and joyful no matter how old or young we may be.

  2. Hi Angela – Regarding faith, I recently finished reading the book “Imagine Heaven” by John Burke. Excellent read for anyone, but especially for those living by faith. It’s a compilation of the experiences of people who have had near-death experiences, as reported by various sources. The results are astonishing, to say the least. Bottom line, Heaven is a real place, and we needn’t worry about how things go here on Earth, other than that we need to be faithful. What I really liked about it was that it made Heaven real, since the reports from dozens of people had so much commonality. And its all tied to scripture.

    I think that when we can get a clearer picture of the ultimate destination, it makes the journey of life easier to bear, especially the harder and more stressful parts. Earth isn’t paradise because Heaven is, and we need to anticipate it in a real way, and understand that God truly will “wipe away every tear” (Revelation 21:4). I think it really relieves us of so much worry.

    Of course, that’s not the way of the world. The world will not only tell us the consequences we will face, but also how we need to do something about every potential threat down the road. That’s a recipe for insanity, and I think it explains the stress we live with and why so many people are struggling with emotional issues and trauma’s. They have us worrying about things we don’t need to worry about, and really can’t. Heck, we’re human – there’s only so much we can handle!

  3. Kevin, what is totally exciting is that a lot of places like the major cancer facilities are now giving people the option of using “faith based” tools. Have not looked into this in much detail but from the TV ads I see, they have a chapel and offer prayer support. I am sure there are other things involved. But just think that years ago, this was not an option. Now to hope they allow the same thing in schools as so many of our young generation are getting old people’s diseases. I am now 58 and who would think an elementary child would be dealing with stress related issues and things like diabetes. It is time for all of us to look to a higher power. I still have my days when my joints ache from the part-time job I have at a retail store. Lol, my knees are telling me it is time to find a “sit down” job. But I keep telling myself that God gave me this job and until he changes things, I have to keep getting up and TRUST that my aches will either go away or not stop me from doing my job. In ending, I see so many people in their 80’s doing much more than they use to in the past. This gives me HOPE that when I get to that age, I will be one of them. Taking care of our bodies at an early age and on through our aging process is what will help our bodies to do what they need to do. Kind of like a car. It needs gas and maintenance to keep going.

  4. Hi Angela – That’s Cancer Treatment Centers of America. I would hope more hospitals do the same. I have a doctor friend at Emory University Hospital in GA, who treated my wife for shoulder troubles. He said “never leave God out of the equation”. It would be great if more doctors approached their craft that way, but a lot them think that they ARE God. I have nowhere near that level of confidence in them, and will stick with my faith in the real God in moments of trouble.

    I agree with you about young people getting “old people diseases”. Its also amazing how many are dealing with emotional and psychological troubles as well, but when I look where our culture is, and where it seems hellbent on going, and it’s hardly surprising.

  5. I am self employed and could no longer afford health insurance under Obamacare. I went to the option of short term insurance with a critical accident and critical illness policy in addition. While this is not the most optimal, I can afford it and going to the doctor. I am better covered now than I was even before Obamacare.

  6. Hi Sam – It’s only a short-term plan, but as the saying goes, “any port in a storm”. And that’s about the size of it when it comes to health insurance. The self-employed are disproportionately uncovered because they have to bear the full weight of health insurance costs, with no employer subsidy. Do you think you’ll be able to replace it with another short-term policy when it ends?

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