The Personal and Financial Risk of Going Without Health Insurance

Healthcare in the United States has seen a lot of changes in the past few years, with prices for coverage fluctuating dramatically and the very platform for healthcare hanging in the political balance. This issue comes at a time when our country is still recovering from a devastating economic recession, and financial uncertainty and fickle premium costs are prodding many Californians to look for alternatives to health care coverage.

Many questions remain unclear to the average buyer. Are there penalties for not having health insurance? Is health insurance a requirement in California? If I can’t afford health insurance in California, or I don’t want to pay for health insurance, what are my options?

In this article, we will explain the risks of not having health insurance in California and other places, as well as how to better understand the healthcare system so that you won’t have to go without it.

Scenarios Which Might Put Us Without Insurance

Despite the number of Americans without health insurance dropping from 44 million to 28 million in just three years with the implementation of the Affordable Care Act, the fact remains that nearly one in ten of us are still uninsured.

While there are plenty of circumstantial reasons we may find ourselves without health coverage, there are studies that reveal correlations for who is going without it. Let’s look at some of the largest factors:

1. Income

   It will come as no surprise that a great number of those without insurance forego it for financial reasons.
   94% of uninsured Americans are significantly below the poverty line. For these people, it may seem too expensive to choose health insurance over going without. In reality, most of this 94% would qualify for subsidies to help reduce the cost of their premiums each month, and many would also qualify for Medicaid. If you are considering going without health insurance, look into the possibility of getting subsidized — the savings can be dramatic.

2. Ethnicity

   40% of those uninsured are Latino, and nearly half of that figure is made up of undocumented immigrants. There are definite economic factors tied in with this statistic, but it is also worth noting that undocumented immigrants are explicitly excluded from subsidized Obamacare plans, Medicaid, and Medicare. They would need to pay for their health insurance plan out-of-pocket.

3. Being a Millennial

   The millennial population comprises nearly half of the uninsured in this country. These young people, mostly in their twenties and early thirties, seem to be avoiding the marketplace because of the significant cost of healthcare premiums. It is worth noting again that nearly all of these uninsured millennials would qualify for government subsidies. Whether they lack the necessary information about subsidies or are avoiding the marketplace altogether, there are solutions to getting this particular subset insured.

4. Being Employed By a Small Business

   For all the apparent political love for small businesses, it stands that nearly sixty percent of those without insurance work for businesses employing less than twenty-five people. The reason for this correlation is that small businesses, under the mandates of the Affordable Care Act, are not legally required to offer their employees health coverage. While larger companies who refuse to provide health care options for their employees must pay a fine, these smaller businesses face no such penalty. It is consequently standard for their employees to go without insurance, as the relative cost of their premiums is assumed to be too high.

While it is essential to understand the various systemic problems leading to being uninsured, it is also worth noting that the common thread among all of these correlations — income, ethnicity, age, and employment — is an economic one. Most people who go uninsured do so because they feel that they can’t afford health insurance, or that the premiums alone would eat up too much of their income.

For the majority of them, there are remarkably affordable ways to sign up for coverage — and as we shall see, the effects of going without insurance can often be costlier in the long run than signing up for a plan.

Consequences of Not Having Health Insurance

The risks associated with not having health insurance are grave, to say the least. There are dire personal risks — namely, your health in both the short and long term — which you can most efficiently avoid by signing up for a health care plan.

Those without health insurance are less likely to schedule regular checkups with a doctor, meaning they are sacrificing one of the greatest powers available to them through modern medicine: preventative care. Preventative care is a doctor’s ability to spot the early stages of an impending problem or illness and to treat it accordingly. Those without preventative care are more likely to be hospitalized for health issues that could have been easily treated had they been detected early.

Consider that chronic lower respiratory disease, cancer and heart disease are the three leading causes of death in the United States. Each one of these illnesses has multiple causes, but excluding hereditary cases, most of them are preventable. With proper self-maintenance and medical care, it is likely that up to ninety-five percent of cancers and up to eighty percent of heart diseases are preventable.

Preventative care offers services such as:

• pregnancy screenings and monitoring
• checkups for different types of cancers: testicular, colorectal, breast, and more
• blood pressure checks
• cholesterol and diabetes tests
• help with healthier lifestyle habits such as diet, help with quitting smoking, lower alcohol consumption, and reducing stress
• checkups for babies and children
• flu shots and vaccines

Each time you go in for a checkup, you are increasing the likelihood that you will be alive and well ten years from now. Health insurance plans often include annual checkups, which makes them a literal lifesaver in the long run.

Financial Implications of Not Having Health Insurance: Long-Term Risks

It is essential to understand that, just as automobile insurance is not put in place to prevent accidents, health insurance is not there to save your life — other than preventative care, of course. Instead, it is a tool to help protect you from financial burdens imposed by health issues.

Five percent of the United States’ population is responsible for half of all its health care spending. What this means is that, if you fall into that five percent, you are spending over $50,000 per year in medical expenses. However, half of the population spends less than $400 per year on medical expenses. It is understandable that, for healthy Americans with generally low healthcare costs, the idea of paying expensive premiums might seem inadvisable.

However, there are two rebuttals to this notion. First, as previously discussed, access to regular preventative care is likely to save you both time and money in the long run. Secondly, the risk you take with going uninsured is one that could potentially bring you to the brink of financial ruin.

The numbers are staggering. A trip to the emergency room can cost thousands of dollars. Brain injuries cost between $87,000 and several million dollars. None of these problems are things we plan for, but they come unexpectedly and force us to react.

Then add in the possibilities of more run-of-the-mill ailments like infections, broken bones and other illnesses. Even skipping a flu shot, which under many insurance plans is free, can lead to catching the flu, paying for medications, and missing many days of work and income. This, again, can result in hundreds to thousands of dollars lost. The resulting truth is clear: going without medical insurance can quickly cost more than paying for premiums.

Furthermore, not having health insurance actually costs you money up front, as there are penalties for not having it. The healthcare marketplace charges a penalty of 2.5% of your annual income for choosing to go without coverage. While this may cost less than some health care plans, keep in mind that it is merely lost money — it does not pay for any healthcare.

In conclusion, the combined effects of both bankruptcy threat and penalty charges make going without health coverage a financial risk. As is often the case, spending a bit more now can save you massive amounts of money in the future.

Minimum Essential Coverage

To avoid paying the penalty for not having health insurance, a person must be enrolled in a plan that provides what the marketplace terms “minimum essential coverage.” In California, every plan offered in the marketplace qualifies as minimum essential coverage — including those bare-bones plans known as “catastrophic plans.”

The idea behind minimum essential coverage is to protect the consumer. It effectively bars plans that would give inadequate protection, acting as a sort of quality control to help keep the minimum standard from being left up to market forces.

Minimum essential coverage includes any of the following:

• The majority of coverage through Medicaid
• Coverage through TRICARE
• Any coverage bought in the non-healthcare.gov market, which includes health plans found in the Health Insurance Marketplace — otherwise known as the Affordable Insurance Exchange
• Coverage from Medicare Part A or Medicare Advantage options
• Coverage through Children’s Health Insurance Program
• University health plans for students, which are self-funded and must have begun before January 1, 2015
• Specific forms of veterans’ health coverage, which is offered by the Veterans Administration
• Non-appropriated Fund Health Benefit Program coverage
• Plans catered to volunteers in the Peace Corps
• Coverage sponsored by an employer, which includes coverage under the Consolidated Omnibus Budget Reconciliation Act and coverage for retirees
• Plans through Refugee Medical Assistance, which is made by the Administration for Children and Families
• Coverage through a state high-risk pool, which must have begun before November 27, 2014

Always be sure to check if your health plan meets minimum essential coverage requirements. If it doesn’t, you could be forced to pay a penalty on top of your premiums.

Things to Consider When Getting Insurance

1. Will Your Local Hospital Accept It?

   Many plans only work in specific networks of care providers. If you have a primary care doctor or specialist who you wish to continue seeing, make sure they accept whatever plan you are considering. Better yet, see what the network of your plan is: does your provider limit you to certain doctors and hospitals? Will you have to pay an extra fee to go outside of the network?

2. Are Prescription Drugs Covered?

   Prescription drug coverage may be a priority for you, and not all health plans pay for it. Make a list of any prescriptions you know you’ll need, and see if your plan will cover them.

3. What Is the Deductible?

   The deductible is the amount of money you will have to pay out-of-pocket before insurance kicks in. What is your annual deductible, and do you have enough set aside to cover it if need be? Also consider that co-pays may be included in your deductible. These are what they sound like: for certain procedures and bills, the insurance pays a portion of the cost, and you pay the rest.

   Don’t always shy away from a higher deductible. If you have money set aside to cover emergencies, you will save quite a bit in the long run by taking on a higher deductible, as they usually result in lower premiums.

4. What Are the Monthly Premiums?

   This tends to be the deciding factor for most people, as this is the minimum monthly payment that will come out of their pockets. Keep in mind that a plan with a low premium will often find other ways to recuperate the costs.

   The ways that health insurance providers tend to compensate for low premiums are through higher deductibles and smaller co-pays. Plans will often offer a small dollar amount as co-pay for things like doctor’s office visits. However, an actual visit to the doctor can easily cost hundreds of dollars, which could wind up being more expensive than a better plan with a slightly higher premium.

5. If Your Employer Is Offering Health Care, Is It a Good Deal?

   In many cases, employees can find better health care by searching the marketplace on their own. The most important factor in this is to see if your employer’s healthcare is free for you, or if you’ll have to pay for it out of your paycheck. If you’ll have to pay, it is worth scouting for a better deal.

Health insurance is a good deal in the long run, and you don’t want to burn money and take enormous risks by going without it. Head to Health for California to search for the best plan for you, your family, and your budget.