Opting Out of Obamacare

Treating the Symptoms, NOT the Disease

Starting this year many Americans will feel the pain of tax consequences if they did not purchase health insurance under the ACA mandate in 2014.  This year the penalty is $95 per adult and $47.50 per child under 18 or 1% of their yearly income above the $10,000 filing threshold.  These could result in thousands of dollars… actually a maximum of $12,240 for a family of five making 50,000 a year.  Next year the penalties more than double.  Yes, this can be painful.

Last week Senators McCain and Barrasso introduced legislation that would allow certain Americans to opt out of the ACA mandate and avoid these high penalties.  Upfront, this sounds attractive.

But insurance only works if everybody plays.  It is a rule in the insurance world that the unafflicted will always subsidize the afflicted.  That is true in ALL types of insurance.  The person who’s house did not burn down subsidizes the unfortunate person who’s house did burn down.  That’s just how it goes.  That’s what makes the economics work.  If only high risk individuals buy the insurance, the premiums skyrocket.

For 30 years I dutifully paid my health insurance premiums.  For 29 of those years the only medical care I needed was routine physicals and occasional minor acute care.  For one of those years I had open heart surgery with a total bill in the neighborhood of $200,000 which my insurance covered.  I wish I would have had the foresight (or clairvoyance) to opt out 29 of those 30 years.  Think of how much money I would have saved.  Insurance is always a bet against yourself;  by definition you buy it hoping never to fully use it.  Most of the time you never need it, but when you do, it is usually catastrophic.

As an example, in all fifty states, liability insurance is required to drive a vehicle.  Of course, there are always uninsured motorists, but if caught, they face a penalty.

I have no problem per se with mandating health insurance.  But that’s really only the symptom of this disease.

In medical school physicians are taught to treat the actual disease, not the symptoms, whenever possible.  If one has pneumonia, coughing may be a horrible symptom, but treating the cough alone is insufficient.  In order for the patient to get better, the physician must treat the bacteria that is causing the pneumonia.  The cough will then go away on its own.

The ACA insurance penalty could be a real problem for many Americans.  Especially the healthy ones who do not feel it necessary or cannot afford to purchase expensive insurance…. by the way, the very ones we need to purchase this insurance to make the economic model work.

The actual disease is the high benefit health insurance product that is mandated by the ACA.  It is simply too rich for everybody to afford.  Even with auto insurance, only the liability is mandated;  and there is a basic threshold of liability that is mandated.  Additional auto benefit plans are optional and the consumer can pick what type of coverage to purchase on top of the required.

A much better option is to continue an insurance mandate, but make the product more basic.  For example, what if the mandate were simply a $10,000 catastrophic health plan.  The biggest liability any person could ever have would be the $10,000– no small sum, but that can be managed through time.  In other areas of insurance creative products such as diminishing deductibles have been developed.  Why can’t we be similarly creative in health care.  The premium for such a plan would be much more affordable.  Of course, higher benefit plans can be purchased by consumers if they wish.

The present ACA mandates a Mercedes when maybe all that is needed is a Yugo.

Yes, the penalty is painful. But mandating insurance is an economic necessity.  The mandate is merely the symptom.  The required, expensive benefit is the disease.

Let’s look at a basic level of coverage that is more affordable for the individual, continue a mandate for such a product,  and then allow that individual the option of purchasing any additional coverage.

Let’s treat the disease, not the symptoms.

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