Kaiser Family Foundation (KFF) Health News is once again writing about families who dropped coverage due to Affordable Care Act plans becoming unaffordable. Newsflash: they never were affordable. KFF chose to profile a family who really should invest in coverage, due to a dangerous job and past injuries. They dropped coverage when the cost rose from a (subsidized) $130 a month to an (unsubsidized) $550. Paying $550 for a couple is nothing. Try paying nearly $1,000 a month with a $10,000 deductible for just myself! The average cost of an employee health plan for a family is nearly $27,000. As an aside, the man profiled is a self-employed auto mechanic who often works late into the evening to meet the demand. It’s not clear to me how an auto repair shop owner working 50 hours a week or more cannot afford $6,600 a year on Obamacare coverage for him and his wife. The math suggests otherwise. I suspect they merely view Obamacare as a poor value for their money. I didn’t see where KFF Health News disclosed the family deductible for the plan they declined, but it is not hard to believe someone may decide $6,600 a year for a $12,000 family deductible is a poor fair value. The wife told KFF Health News:
“It makes no sense,” she said. “It’s not worth it anymore.”
Regardless of the details, they obviously felt their $6,600 a year in premiums would be better used to pay for medical bills as needed, rather than pay for premiums and then pay for medical bills out of pocket when they need care. They acknowledged they took a gamble, but the gamble is how much medical care they may need. If their individual deductibles are, say, $6,000 apiece the gamble is whether either one’s medical needs will exceed $12,600 or their combined medical bills surpass $18,600. Microsoft AI Copilot estimates the odds of either one of this couple’s medical bills exceeding $13,000 a year are only between 5% and 10%. That is a risk they were willing to take.
Public health advocates do not understand the calculus of health coverage. They assume families demand health coverage as a social preference, rather than a financial calculation. Many families have been programmed to view health coverage as just something you have. However, some people weigh the risks and benefits. Families with access to employer coverage have less of a decision to make since declining coverage only saves the employee contribution. However, when families of modest means realize health coverage unlikely to provide for any of their day-to-day medical needs, it becomes harder to justify spending $6,600 a year.
The root cause of people deciding to become uninsured is the poor way health care is financed. Consumers are so far removed from the equation that it’s impossible to know the price in advance of receiving care. Rather than tackle this [lack of competition] head-on, would-be reformers in Congress instead created a convoluted system of mandated benefits, mandated coverage, huge cross subsidies, and generous tax credits. Before Congress passed enhanced tax credits, the only people who enrolled in Obamacare were low-to-moderate income families who received generous tax credits. After the lapse in enhanced tax credits, the only families who find Obamacare affordable are low-to-moderate income families.
Congress should start over and reform the health care system in ways that result in competition. The billionaire owner of Mark Cuban Cost Plus Drugs has asked why insurance companies pay $2,500 for an MRI when a center down the street only charges $350? We can assume the answer is that insurers earn more overall from higher prices than from lower prices. Keep in mind, about half of the medical claims insurers pay are for self-funded employer plans. As such they are spending other people’s money. Also keep in mind, insurers charge fees to manage employer plans based on the volume of business. The answer to Cuban’s question (which he already knows) is Congress refuses to reform a flawed system because too many donors’ ox will get gored in the process.
KFF Health News: They’re Uninsured After Obamacare Became Too Costly. And They’re Far From Alone