Time to renew unaffordable health insurance

It’s the least wonderful time of the year, when it comes to renewing individual health insurance.

obamacare

Image by Shutterstock

Before Obamacare, millions of families in this country were doing the right thing—responsibly purchasing individual health insurance within a free market. And paying for it themselves, without the help of a government subsidy.

Under our “if you like your plan, you can keep your plan” policy, our family’s monthly premium for a $5,500 deductible was approximately $600 in 2013, $650 in 2014 and $700 in 2015. Increases every year, but manageable ones.

The monthly premium for 2016 will jump to nearly $1,000. There are fewer and fewer of us in these remaining, old plans, and the premiums reflect it. In the past, we were able to shop around for other policies with various coverages and premiums that would best suit our family.

Now, our only option is Obamacare.

To participate in the Affordable Care Act exchange program, our family’s monthly premium would be $1,600 for a $6,700 deductible. Not very affordable.

The majority of Obamacare enrollees, 86 percent, take advantage of government subsidies to get monthly premiums down to a reasonable rate. But we, and many others, took pride in purchasing our own insurance before Obamacare without subsidies.

You give that up with Obamacare. It sends the message to families that they’re not capable of taking care of themselves, that they need the government to do that for them.

Obviously, the old ways weren’t perfect either. Underwriting for pre-existing health conditions in the individual market meant many were simply unable to secure insurance.

There might have been another way, another solution, without the government becoming so heavily involved with nearly one-fifth of our economy.

According to the U.S. Census Bureau, there are about 130,000,000 households in the country. Included in that number are the poor and the elderly. Medicaid and Medicare are in place to protect these vulnerable groups.

The remaining households are workers. Many receive some type of health insurance through their place of work, where the employer contributes to a portion of it. And it’s this type of group insurance that doomed the individual health insurance market. With fewer in the market needing individual health policies, insurance companies would underwrite for pre-existing conditions—keeping their plans, funded by smaller numbers, solvent.

A movement away from employer-funded group insurance and toward individual and portable health insurance—where every family unit purchases its own health insurance in a competitive market—may have been a better solution. Imagine tens of millions of households purchasing health insurance policies from hundreds of competing insurance companies offering dozens of options. It may have better provided competitive rates and satisfying plans for all. Middle-aged couples could have selected a plan that didn’t include costly, maternity coverage. Young, single adults could have chosen an inexpensive major medical policy. Consumers would have been free to make all kinds of coverage decisions that were best for their families—not dictated by a group employer plan or by Obamacare.

In the current environment, this would be tough to change. Obamacare penalized employers ($100 a day per employee) who didn’t offer a group plan but were providing some type of reimbursement to employees who were purchasing health policies off the individual market. On the other hand, employers who contribute to a group plan are rewarded with tax breaks.

In a world without Obamacare, the opposite would be more sensible. Employers who reimburse employees, in some way, for individual health plans should be rewarded with tax breaks. Employers who contribute to group plans, which harm the individual market, should lose tax breaks.

Under this scenario, employees would still receive a health care benefit from their workplace if employers were allowed to reimburse them, in some way, for individual plans. What’s different is that employees regain control of choosing a plan that’s right for their family. And in this highly mobile world, individual and portable health insurance would make it easier to change jobs—or even start a business—because insurance would travel with you. You’d own it.

Some lessons learned, though, from Obamacare would be useful in moving away from group plans and toward more individual policies. Eliminating underwriting is one. With many more customers entering an individual health insurance market, it would have been far easier to spread the risks and absorb costs associated with pre-existing health conditions. Also, requiring all individuals to have some type of health insurance or be subject to a reasonable fine was another step in the right direction. If you have a car, you’re required to have car insurance. If you have a body, you should be required to have health insurance. Eliminating underwriting and requiring all individuals to be insured go hand in hand. Otherwise, it would be tempting not to purchase health insurance until you became unhealthy.

The federal government could also help a movement toward individual plans by allowing health insurance companies to sell across state lines to increase competition, and by enforcing antitrust laws against monopolies.

Fostering growth in the individual market, instead of decimating it, might have been a more workable and less traumatic upheaval in the health sector.

Unfortunately, we don’t live in that world today. We have Obamacare. And monthly premiums of $1,600.

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