It’s Their Own Damned Fault: The Financially Imprudent American Health Care Act

Several years ago, I was asked to give a series of financial literacy talks in conjunction with a grant-funded program.

My lectures ran the gamut of personal financial management topics, including budgeting, cash and credit management, and savings and investment fundamentals. But it was the talk on insurance that comes to mind these days as Congress is busy dismantling the Affordable Care Act, commonly known as Obamacare.

It began simply enough with a discussion about actuaries and how their job is to handicap the likelihood that certain risks — auto accidents, kitchen fires, ailments, for instance — will occur within specific population segments, and the financial implications of the claims that would consequentially result, all in an effort to determine the appropriate charge for a given policy.

It was at that point that my lecture went off the rails.

An older woman (I’ll get to how old in a moment) raised her hand to ask a question. I paused my presentation to call on her. As it turns out, she didn’t have a question after all. What she did have was a rant.

Emblematic of the times, she launched into what she described as “government’s unconstitutional takeover of health care,” and how Obamacare was going to “ruin our country.”

I didn’t let her continue. Not because she wasn’t entitled to her opinion. I assured her that she was; we all are. It’s just that this wasn’t the proper forum for a political debate. The sole objective of my talk was to deliver information

Fortunately, the woman accepted my gentle rebuke, and we got back on track.

After I was finished, I walked over to her and asked whether she wanted to continue the conversation face-to-face. She said yes and picked up where she had left off.

She was really angry. So, I asked why she felt the way that she did. She said that a friend of her husband’s cousin owned a small business that couldn’t afford to provide health-care benefits to its employees, and that the new law would “bankrupt him.” The fact that this small business had fewer than 50 employees — therefore exempt from the ACA’s employer-shared responsibility provision — was beside the point. It was still “an illegal government takeover,” as far as she was concerned.

When I asked how her own health-care costs were covered, she responded with a smile, “Medicare, of course.”

That she failed to realize (or acknowledge) that Medicare is a federal program isn’t the problem. That 49% of the U.S. population is covered by employer-sponsored health-care plans — and 14% by Medicare and 20% by Medicaid — is. (Of the 17% balance, 7% have non-group health-care insurance, 2% have other public coverage and the remainder are uninsured, according to a Kaiser Family Foundation analysis of U.S. Census Bureau data.)

So, I decided to tell her a story. My story: how, until the time of my retirement, I benefitted from a wonderful company-sponsored group insurance plan. I could choose my physicians, didn’t have to bother with preapprovals and had only a $250 annual deductible — all for my premium payments of $200 per two-week pay period.

When I retired, I took advantage of COBRA — a law enacted during the Reagan administration — which entitles departing employees to uninterrupted health-care coverage under their former employers’ plans for a maximum of 18 months. The only catch is that the employee becomes responsible for both the employee and employer portions of the cost. In my case, my former employer had picked up 50% of the tab, which meant that I became responsible for an $800 per month payment for the coverage I intended to keep in place — a price I was willing to pay.

Just before my COBRA coverage drew to a close, I contacted an insurance consultant to help arrange for a new policy. It was at that point that I realized the severity of the health-care crisis in this country.

The consultant asked to see me soon after he received the quote. It totaled $5,000. Per month. $60,000 per year. For the same level of coverage — with the same insurance carrier, no less — that once cost me a little more than $5,000 per year as an employee and $10,000 per year under COBRA.

You see, my wife had a “preexisting medical condition” at the time; an event that occurred within five years of the time of our application. She was therefore assigned to our state’s high-risk insurance pool. The cost of her coverage alone was $3,400 per month! Fortunately, my health was good, so the cost of my coverage was only $1,600 per month.

Needless to say, I was stunned. So too was everyone that heard my news — former colleagues, friends and the woman who attended my lecture — for the reason that I mentioned before: they all enjoyed reasonably priced employer- and government-sponsored insurance coverage.

My wife and I ended up choosing a so-called high-deductible plan that was tantamount to catastrophic insurance. Catastrophic, because at roughly $30,000 per year in total cost (premium plus deductible), it would take a catastrophic event to have that pay for itself.

Which brings me to Obamacare. When the exchanges opened for business on October 1, 2013, I was online and on the phone, and our 2014 out-of-pocket cost was halved compared that of the prior year.

Are there problems with the ACA? Sure. Premiums are increasing, in part because too many healthy people are opting to pay the penalty instead of arranging for insurance. Essentially, that means there aren’t enough of them to offset the claims that are being made by those who are not as healthy and in need of more and, oftentimes, costlier care.

Congress recently passed the American Health Care Act that, among other things, proposes to reintroduce high-risk pools that would be, for a time, subsidized with additional federal dollars. The AHCA also proposes to give each state the right to disregard the original ACA’s minimum standards of coverage for the insurance policies that are offered to its residents.

Given my personal experience with high-risk pools, I am concerned that less-healthy citizens will once again face unaffordable premiums that — if their states indeed elect to do away with the ACA’s minimum standards of coverage–will encourage them to accept bare-bones alternatives, placing them — and, by extension, us — at even greater financial risk should their conditions worsen and they are unable to pay for the care they receive.

Now, there are those who say — including some in Congress and a few physician acquaintances — that it’s unfair for people who are healthy to be forced to pay the price of treating those who are less so, when their unhealthiness is their own damned fault.

But who would determine the level of fault, per se, and how would that be done?

You know, during the 2012 election cycle, there was a fair amount of talk about death panels. How Obamacare would lead to physicians and hospital administrators deciding which patients deserved to be treated.

The irony of this is how the “it’s their own damned fault” argument will end up accomplishing what the ACA never intended.