Our Family’s Entrepreneurial Obamacare Success Story

Some people’s rates went up. Our family’s rate went down by about $1,700 a month (or $20,400 a year.)

(So we might as well just get this out of the way: Healthcare.gov was awful. To call it frustrating would be an understatement: We felt really powerless. In 3 months we were never able to get an application to go through and we tried many times. In the end we realized we could just call our regular old insurance agent and sign up through them, so we did.)

ABNORMAL

On January 5, 2012, after a painful day at work, I learned in an emergency room that I was born with a congenital abnormality in my guts that was a bit like an appendix, but bigger, and right in the middle of my intestines rather than at the end. I was told that 98% of people who have the same thing live and die without ever knowing about it.

EMERGENCY SURGERY

The other 2% typically end up in the ER and require surgery. In my case, it was the emergency kind that they do the same day and it wasn’t the sort of minimally invasive laparoscopic surgery you’d expect if you were having your appendix removed. Instead, I have a 6-inch scar right down the center of my abdomen and “full recovery” took about 5 months.

SELF-EMPLOYMENT

In May of the same year, I received a late pay cheque from the consulting company I worked for. I knew what that meant, so I started asking around among developer friends whether anyone had leads for consulting work that they couldn’t service themselves and would refer to me. A few weeks later, I had enough work to go out on my own.

BASICALLY UNINSURABLE

When I went to apply for health insurance, I was in for quite a shock. Through my previous job, our health coverage was about $700/month for the family and my employer covered about $150 (for me.) Because of my surgery, and because of my son’s asthma and allergies, our quote on the personal insurance market came back at $2,300/month for a plan with a $7,500 individual deductible. That’s $27,600/year in premiums! Because my previous employer had less than 50 employees, there was no option available to simply continue that coverage and pay for it myself.

OUR “SOLUTION”

So, at that time, our “solution” was to sign my wife and daughter up for long term health insurance at about $350/month and sign my son and I up for 6-month short option health insurance at about $50/month. $50/month sounds like a bargain, but you get what you pay for. Short option health insurance doesn’t cover pre-existing conditions. So, every 6 months you lose all your future coverage for anything that might have happened. The reason it’s so cheap is that they’re not actually insuring you for very much. If you develop some long-term chronic illness, they’re only on the hook for the next few months. After that, you’re on your own. And not only will your next short option plan not cover your now pre-existing condition, it won’t even get you an in-network benefit for the treatment you pay for out of your own pocket. Frankly, that’s probably the worst part, because that in-network discount (otherwise referred to as the “allowable charge” for a service which is negotiated between the provider and the insurance company) can reduce your bill by 50% before your deductible is even met.

THE BACKUP PLAN

I hate to say it, because it would make us leeches, but the reality was that our real insurance was the fact that 3 of the 4 members of our family have Canadian citizenship and the only one that didn’t had long-term insurance here in the U.S. If any of the Canadians developed a chronic condition or were in a life-changing accident… the short option insurance would cover the catastrophic costs for a few months while we moved back to Canada and waited for that insurance to kick back in. Again, I hate the idea of doing this in principle (e.g. we haven’t been paying into the insurance system there in taxes,) but in reality I’d still do it.

THE OTHER BACKUP PLAN

There did exist another option for non-Canadians in my situation: Short option your way through each year and hope nothing long-term comes up. If something does, give up working for yourself and go get a job at a big company where you can hide in a large pool of employees. Everyone’s premiums will go up a little next year, but you yourself will be paying way less than you would have to on the individual market. A little bit more from everyone else will help subsidize your insurance premiums.

FOR OTHERS IT WAS WORSE

But it would be game over in terms of self-employment for most practical purposes. And it might get worse. If your kid was born with hemophilia like my childhood best friend was in Canada and another friend’s son was here in the U.S., you would potentially run into life-time maximums on your insurance policies. This is where the medical care you or your child requires ends up costing hundreds of thousands of dollars or even millions in a matter of a few years and your insurance company just stops covering any of it. If this happened to you, you would have to actually go find another job so you could sneak into their pool for a few years. Rinse, repeat for the course of your career, and your child’s, too. Our family’s problems with healthcare were just the tip of the ice burg. Other families had it way worse.

FOR OUR PART, WE’RE GOOD NOW

For our part, our entire family is now back on a “real” health insurance plan for the first time since I became self-employed. The price we were quoted this time around was $1,700 *less* per *month* than the last time we got a quote together. That’s a reduction of $20,400/year in premiums. Our deductible is still really high by most people’s standards, but our family’s annual out-of-pocket maximum is something we could afford each year if something long-term and life-altering came up. That means “moving to Canada” isn’t our backup plan anymore. We’re effectively insured.

A POTENTIAL SHOT IN THE ARM FOR ENTREPRENEURSHIP

Another thing I’m excited to see are how many more people will come out of the woodwork of traditional employment and start experiencing self-employment and entrepreneurship. Previously, losing your job and not getting another one would be a big problem for people with “pre-existing conditions” who relied on group coverage to keep their premiums affordable. Now folks in the same position could actively leave their jobs to pursue the business opportunities available to them, and be confident they can get insurance on the individual market. That’s pretty awesome. I wonder what sort of impact that will have on the economy. The job they leave most likely becomes an open position, and they may very well create new jobs in their entrepreneurial venture.