This piece was co-authored by Dr. Linda Gorman. Dr. Gorman is the Director of Heath Care Policy at the Independence Institute.
One of the strangest things about Obamacare is that it is trying to force millions of families to obtain the wrong kind of insurance. When they turn it down, these families often end up with no insurance at all.
As an alternative we propose to allow people to obtain a more limited type of insurance – one that better meets individual and family needs. This insurance would be less costly than ObamaCare insurance; it would pay the vast majority of medical bills the family is likely to incur; and it would at the same time protect the family’s income and assets.
There are two reasons why people need health insurance: to protect assets and to gain better access to care. For young, healthy families with low incomes and no assets to protect, Obamacare’s mandated insurance is unlikely to meet either need.
Employees who earn $15 or $20 an hour, for example, typically have very few assets. In most urban areas you need to earn almost the median family income to be able to buy a house. If these employees have a car it probably has very little re-sale value. Most likely, they are living paycheck to paycheck.
Say one of these employees has the misfortune to have a pre-mature baby with very high medical expenses. Whether those expenses are $100,000 or $1 million doesn’t really matter very much. The family will not be able to pay even a small fraction of the bill. If they abide by Obamacare’s mandate and obtain health insurance with no annual or life time maximum, health insurance will pay the bill (beyond their out-of-pocket exposure). That may be great for the hospital that delivers the care. But how does that help the family?
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Does Obamacare insurance improve access to care? In theory, it should. That would be especially true for specialist care in the case of a chronic disease. However, young healthy families typically don’t have expensive-to-treat chronic illnesses. Their medical needs are likely to consist of generic drugs, an occasional doctor visit and once in a while a trip to the emergency room. Without health insurance or a Health Savings Account, these families must pay for those expenses with money out of pocket.
The typical Bronze plan offered to employees of fast food restaurants has a deductible of $6,000 or more and it’s double that for family coverage. With this type of plan the family will still have to pay almost all its expected medical bills out of pocket. Employers are allowed to charge employees a premium equal to 9.5 percent of their wages for this type of coverage. It should come as no surprise that almost all the employees turn these offers down.