Consumer’s Health Insurance Blog

Health Insurance Book Author on Buying Health Insurance and Health Insurance Ripoffs

Response to Self Employed and Going It Alone

January 8th, 2008 by Jonathan Pletzke

In today’s Phildelphia Inquirer, Jen A. Miller, a writer, tells all in describing how health insurance rates are affecting her life. Jen writes well, and appears to be intelligent. She hasn’t read my health insurance book yet, so I took a few minutes to send her some information about why her health insurance is so expensive, and what can be done about it. You may also be interested in what I said:

Dear Jen,

I enjoyed reading your commentary in the Philadelphia Inquirer this morning. As I was reading it, I thought, why is her health insurance so high for a single person? That shouldn’t be the cast in Pennsylvania. Then I go to your website and see that you live in Collingswood, NJ. Aha!

You see, the state you live in has an incredible impact on health insurance rates. I know first hand. I used to live in New Jersey. New Jersey is one of a handful of states that has “community rating” and doesn’t use medical underwriting for rates in the individual market. My family paid close to $900 a month in New Jersey for health insurance. In North Carolina, we pay just over $300 a month for the 5 of us.

Why is there such a difference? First of all, New Jersey guarantees that everyone can get health insurance: healthy or not, young or old. And everyone pays virtually the same rate. So the young and healthy pay more than they might elsewhere, so that those with a medical condition pay less. The biggest problem that I see is that this condition prices many people out of the health insurance market. Like you. Secondly, since there is a guarantee, someone could go their entire life without health insurance, and when they suspect something, buy the health insurance and wait for the 6 month pre-existing condition limitation to expire. Due to the high rates, I know a number of people who are following this approach – out of necessity.

It could be worse – you could live in Massachusetts, where the rates are even higher. And health insurance is compulsory – you’ll get a fine if you don’t have it. It could be better, in that you could have a more reasonable rate (check out what your rate would be in a decent neighborhood in Pennsylvania).

So what are your options? You could move, get married, get a job, earn more, or even get a small business health insurance plan to try to reduce costs. You could also organize with the rest of those who find New Jersey health insurance rates too high – to find another solution for the state that allows those who maintain a healthy lifestyle to have lower rates. Rhode Island has an example of this: where you can choose whether you want to be medically underwritten (for a lower rate), or get the community rating rate (higher) and skip that part of the application.

And what about the whole presidential debate about health insurance? Unless they are going to fund the difference in rates through taxes, or make a government run everyone-care, like Medicare, rates for the rest of the nation are likely to get much higher. I haven’t yet seen a candidate proposing to fix the health insurance mess that has a plan that will lower rates for you.

-Jonathan Pletzke

Jonathan Pletzke is a consumer expert on health insurance and author of the health insurance book Get a Good Deal on Your Health Insurance Without Getting Ripped-Off, available online and at bookstores nationally. Additional details can be found at the consumers health insurance book and resources website www.BestHealthInsuranceBook.com. Copyright 2007-2008 Aji Publishing.

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3 responses so far ↓

  • 1 Steve Jan 16, 2008 at 12:10 pm

    I used to think this way about health insurance. Then reality hit.

    I have always been responsible and had health insurance even when I was young, and even when I had to get an individual policy. At the age of 45 I left my job that had coverage to be self employed. I remained on their plan through COBRA. During a routine blood test while increasing my life insurance, I discovered I had Hepatitis C. As the date of COBRA expiration neared, I applied for an individual policy, and, of course was turned down. Fortunately, our state has a mandated high risk pool reinsurance plan. This plan is not cheap, and has really crummy coverage. It’s like a bad catastophic policy, but better than nothing (I think…it’s debatable). So, after years and years of paying for health insurance while I was healthy, and almost never even made a claim, now that I finally get sick, I’m quickly cast overboard.
    I took the grueling 12 month treatment for HepC, and because my insurance now is not that great, it cost me around $18,000 out of pocket. Unfortunately it didn’t work. New drugs are coming out, but I can’t afford to treat again, so I will likely wait for 15 years until I get on Medicare, and hope I’m okay that long. I’ve always lived a clean life, no drugs, very little alcohol (and now no alcohol at all), so it’s possible I’ll be ok until then. To top off my wonderful experience with the health care industry, we discovered that it’s likely I was born with Hep C which I got from my mother, a registered nurse, who most likely caught it from an accidental needle stick.
    So when you’re young and healthy, it may seem great to get lower premiums by excluding the sick from your risk pool. But you may end up screwed just the same when it’s your turn to get sick, and all the gold stars you earned for being a responsible consumer earn you nothing.

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