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March 28, 2018

Why 3 American families rejected health insurance—and how they're making do for now

Daily Briefing

    For people who do not have health insurance through work or from the government, the cost of coverage "is higher than ever"—leading "thousands of people" in the country to make "the same hard decision to go without health insurance," John Tozzi writes for Bloomberg.

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    To "understand the trade-offs when a dollar spent on health insurance can't be spent on something else," Bloomberg is profiling a dozen uninsured families—some of whom are "financially comfortable" and some of whom "are scraping by"—over the course of the year.

    The value of insurance

    According to Tozzi, research shows a range of health and financial benefits are associated with being insured: People who are insured receive more preventive care, visit the doctor more frequently, and report that they generally feel healthier than those who do not have insurance. And on the financial side, people who are insured typically have a lower likelihood of bankruptcy.

    The Affordable Care Act (ACA) extended insurance coverage to nearly 20 million people, Tozzi writes, bringing the uninsured rate to a near all-time low. But according to Tozzi, the ACA is not without its quirks: The law's requirements barring insurers from charging sick enrollees more or refusing them coverage led many insurers to raise their overall premiums. And while ACA sought to offset those increases and make coverage more affordable through cost-sharing mechanisms, such as federal subsidies to reduce the cost of premium subsidies, those benefits are not available to everyone.

    As Tozzi notes, a family of four making above the $100,000 threshold would not qualify for federal subsidies and would have to pay the full cost of coverage, which he reports, is at an all-time high. As a result, some people are opting out of coverage altogether and choosing instead to pay the ACA's penalty for remaining uninsured, which under current law will remain in effect until 2019. According to the Kaiser Family Foundation, about 27.5 million U.S. residents under age 65, or about 10% of that age group, did not have health insurance in 2016—and cost was the most commonly cited reason for being uninsured.

    And while the Trump administration has proposed changes to increase access to short-term health plans that the administration says would inject more affordable insurance options into the market, those options generally lack the ACA's consumer protections, Tozzi reports.

    The Buchanans

    Among the families profiled in the Bloomberg series are Keith and Dianna Buchanan of Marion, North Carolina, Tozzi writes. The Buchanans have a combined annual income of over $127,000—putting them in the top quintile in the country—but they have chosen to forgo traditional coverage because of high costs and narrow networks.

    Tozzi explains that if the couple, who does not have children, had wanted to use the insurance they had last year, it would have cost more than $30,000. Their monthly premium was going to be $1,813 this year—up from $1,691 in 2017—with a $5,000 per-person deductible. According to Tozzi, the couple said the final straw was when their insurer and the area's major hospital system couldn't immediately reach an agreement, which initially kept the hospital out of network.

    While the insurer and the hospital eventually worked things out, the Buchanans said they didn't see the value in the traditional insurance option. As an alternative, they pay $198 monthly for a membership to a local physician practice, where they have unlimited office visits and discounts on medications and lab tests. In addition, the couple pay $450 per month—plus a $150 surcharge based on the Buchanans' blood pressure and weight—into a Christian health ministry that pools members' money to fund health costs.

    A few days after dropping their old insurance, Keith fell and injured his knee—but according to Tozzi, "it could have been worse." Keith had to pay $511 for an urgent care visit and an X-ray; well under the cost of a premium in their old plan, Tozzi writes. "If we can control our health care costs for a couple of years, the difference that makes on our household income is phenomenal," Keith Buchanan said

    The Owens

    Meanwhile, Mimi Owens, who lives outside New Orleans with her husband and two daughters, looked into alternative sources of coverage after their exchange plan was cancelled. The family paid $750 a month for their old plan, but discovered a new exchange plan would cost nearly $1,600. The family has an annual income of about $147,000.

    They tried some short-terms plans, as well as a Christian health ministry, but Owens said the best option she's found so far is a $130 monthly direct primary care group. Owen said it's "the best care we've ever had"—but it doesn't cover major injuries. Still, their uninsured state makes the Owens uncomfortable. "We were raised to have insurance," Owens said. "This is crazy to us."

    The Bobbies

    For the Bobbies, who live near Phoenix, the ACA's ban on coverage denials for preexisting conditions allowed them to get coverage for their daughter, Sophia, who was born with several major heart defects.  Before they accessed an exchange plan, Sophia's father, Joe, was able to keep her enrolled in Medicaid by reducing his take-home pay. However, the Bobbies faced high bills for services that weren't covered, and they were forced to give up their house and car as a result.

    Under the ACA, the Bobbies, whose annual income is now about $55,000, were able to enroll their daughter in a plan that costs $217 monthly. However, the rest of the family, including Sophia's 7-year-old brother, are uninsured—according to Tozzi, covering Sophia's brother alone would have added $160 to their monthly premium and come with a $6,000 deductible. "Every single decision that you make has to be very carefully calculated so that your finances don't fall apart," Sophia's mother, Corinne, said (Tozzi, Bloomberg, 3/26).

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