Affording health insurance

I have been spending a lot of time trying to rationalize the increase in health insurance premiums that I’ll have to pay in 2017.  The new rate will be more than double the rate for 2016, and more than 5 times what it was before affordable care act was passed.

To be fair, this increase reflects the fact that the earlier policies were ones that I deliberately chosen for use as a last resort.  These were not catastrophic policies, but they had a high deductible and maximum benefits for a year and for a lifetime.  I was fine with that.  The idea of insurance for me is to have something to help for the range between the deductible at the low end and a excessively costly treatment at the top end.

I felt this was an acceptable balance in order to have more flexibility in other life choices.  Clearly if or when I would encounter a need for treatment that the policy would not cover, I would not be happy about it.   But I would be even more unhappy if I had a policy with expenses so high that I would feel a need to cling onto employment as a need to pay the premiums.

My choice worked well for me for two decades.  I didn’t need the job to have a reasonable level of health insurance.  That gave me confidence to let myself be myself at work.  I think that benefited my employers, but it certainly benefited my well-being.   I was happy with the arrangement.

I regret that younger people today are denied a similar option today with the policies bloated with mandatory benefits with no upper limits.   Certainly, most of them are not like I was in my youth, but I’m sure there are more than a few who have similar temperaments as my own.  They won’t have the opportunity I had.

Next year’s premium increased for a lot of factors.  The insurer discontinued the bronze plan so I have to get a more expensive silver plan.   Also, I’m probably in an older age bracket than before.

However, I think the majority of the actual quintupling of cost from pre-ACA levels is due to the law itself.  In particular, it forced insurers to accept new applicants who had immediate health care needs.   These included cases that previously would have been denied due to preexisting conditions or delayed eligibility periods.  The law also encouraged more people to utilize healthcare that was discouraged by the pre-ACA policies.

The first few years of the law resulted in far higher payouts than anticipated.  Also, there were fewer subscribers than needed, especially of healthy people at low risk of needing health care.

As a result, the insurers had to revise their policies.  My insurer had to abandon the bronze level plans and migrate the subscribers to silver.   The rates increased to better reflect expected expenses, where those expectations are now backed up with multiple years of real data of expenses under the new law.

Although it is painful to accept the new obligation to work in order to afford health insurance, this is not a surprise to me.  I predicted this would happen after the law passed in 2010.   I recognized that the policy I had then would soon be replaced with a much less affordable option.   I reasoned that when the rates did raise, I would be too intimidated to take a sabbatical for work.   Largely because of this observation, I left my job in 2011 to enjoy a few years of affordable health insurance.

To be honest, I did not accomplish what I dreamed I might have with this time off, but I had the opportunity to learn the folly of my dreams.   Life would have been better if I didn’t have those dreams, but there are dreams that need to be tested.

If there was a surprise, it was that it took until 2017 for the premiums to rise to level where it would no longer be an option to voluntarily leave a job.  I’m now stuck with the one I have now, a far lesser opportunity than the one I had left in 2011 or what I thought I would be capable of.   I can’t afford not to have income to pay for the insurance.

Under the new law, the worst condition is to be without income at all.   If there is abundant income, the premiums are affordable even if they are steep.   If there were a little income, between 100-400 times above poverty level, there are subsidies for the lowest tier silver plan.  The irony is that having no income at all forces me to pay full price, and now the lowest available option is a silver plan.

Now, the thought of unemployment is very frightening.   Certainly, the option of voluntary entry into unemployment is very unappealing.   I’m working on rationalizing it, but I’m guessing that I won’t voluntarily enter unemployment even if conditions at work become more unbearable than anything I tolerated before.  I’ve finally been put in my place as a wage dependent.

From the introduction of the new law, the debate made a distinction between health care and health insurance.  At the time, the metric was on expanding the population of insured people.  The counter-argument was that insurance does not equal care.   The insurance offered access to care.  Initially, that access would be generous.  Apparently plenty of newly insured people took advantage of the provided access to care.  They got affordable care as well as insurance.

The early argument wasn’t about the near term access to care, but instead on the long term access to care.   The reasoning is that eventually the plans will have to become more restrictive on who qualifies for care, or requiring more time to schedule that care.   As far as I know, this has not happened yet or at least hasn’t happened to the extent predicted.

Based on observations of the first few years of ACA, I would say that it is properly named after all.   It was an act that delivered affordable care to those who needed it, especially those who needed it immediately.   The affordability was on the personal expense of consuming health care resources.

During the debate leading up to the passing of the law, there was also a promise that the premiums would come down.   I doubt this was ever a realistic expectation of the consequences of the actual wording and implementation of the law.  The point of the law was to fund care for those who needed it immediately.   Those funds had to come from premiums.   An argument was made that the broader participation in the market would result in larger pool of subscribers to fund the immediately needed care.  I was among those who were not convinced of the argument, but I can see that there was a non-zero chance that this happy consequence would have occurred.   Even if that were to pass, the affordable insurance would be an accident of the primary goal of delivery of care affordably to those who needed it earlier this decade.

It has always been humorous to read the policy’s boasting of deductibles and out of pocket expenses without including the cost of the premiums.   I did some calculations early on where I added the total premiums in a year with the out of pocket maximums across all metal bands and found the number to be about the same.

A good way to describe the new law is that it redefined a premium as a prepayment of out-of-pocket expenses.   The misleading part is that they don’t include this cost in the advertised out-of-pocket limit.

Having the premium redefined as a prepayment of out of pocket healthcare expenses means that there is an expectation of substantial medical expenses during the same year.  One of the arguments for universal coverage is that everyone will eventually need healthcare assuming they don’t die suddenly from some natural or man-made cause.  Defining a premium as a prepayment of out of pocket expenses changes the expectation where everyone will need at least moderate levels of care every year.   This is partly true with the no-deductible coverage of routine visits, preventive medicine, etc.   But the value of these services is far less than the annual accumulation of premium expenses.   To be considered as prepayment of out of pocket expenses, there would have to be something needing treatment every year.

Clearly this is not the expectation.  As high as they will be in 2017, the premiums could not fund treating every subscriber of non-major illnesses.   The premiums are needed to fund a smaller set of people who have illnesses with very high costs.

A big selling point of the new law came from the cases of many people who were suffering or even dying of illnesses as a result of lack of funds for timely access to health care.  I was more supportive of this argument than the argument that I myself may someday need care.  From that perspective, I considered that the necessary increase in premiums was actually just another form of tax.   I could consider all of the premium increases over the past 5 years as increased payroll taxes.   At the very least, I am at least accepting of the increased tax burden, although it would have been better if it were more honestly presented as a tax.

The problem with the tax interpretation is that I spent a good part of the last 5 years unemployed.   I was paying a tax to support other people’s health care during a time when I had new income.   There is something wrong with imposing a steep tax on people who have no income.   It becomes less controversial when the expense is a premium instead.  The premium is not a tax collected by the government, but it is a government imposed redistribution of wealth from the healthy to the less healthy.  It serves the same role and justification as a tax for the community good, but lack of income is not an exemption from having to pay it.

To be sure, there are taxes that are not excused by lack of income: personal property tax, sales tax, taxes on utilities, etc.   The premium increases (compared with pre-ACA policies) dwarf all these other non-income taxes, combined.  At least it does for me.

Assuming that I remain healthy, premiums are a tax that must be paid even with the absence of income.   Other than the magnitude of the cost, it is no different than personal property taxes.

Even if I can rationalize the increase in expense, I still must accept the denial of the freedom to enter into unemployment voluntarily to pursue some activity that does not provide an income.   Even if events are such that I don’t need to exercise that freedom, there is something lost by knowing that I no longer have that freedom.   I have to be more cautious in how I approach my work so as to protect the income stream that pays the premiums.

Health insurance was controversial even when I started my career in the 1980s.  In particular, the argument was that many people were finding themselves in jobs primarily to have access to health insurance.   One of my first priorities was to get individual plans instead of the plans offered by the employer.   Even though individual plans required me to pay more than the employer’s plans, the cost was affordable and I found comfort in the fact that I can treat employment separately from having a health insurance policy.   A big driver for my entire career until now is that I would not need a job primarily because without a job I would not have health insurance.

What I have to accept now is that that era is now over.   I need a job primarily because otherwise I would not be able to afford health care.  Affordable Care Act turned out to make employment mandatory.

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