Heath Insurance Book, Chapter 1, Section 3
F or some people there is no question about it: you must have health insurance. When casually asking my friends, who are unhappy at their jobs, why they stay, the number one response is that they are staying in order to keep the health insurance – even though they and their families are healthy. For others, they may want health insurance but feel that it is always out of their grasp financially.
| Over the years, I have known people who take the risk and do not get health insurance, simply because of the cost of individual health insurance plans. For example, young, single people just starting out, working for a small company, would rather pay for the one visit to the doctor out of pocket or simply not go to the doctor at all and don’t buy insurance. Middle-income families in community rating states, where the minimum premium for health insurance is higher than other states, cannot afford the premium. Older folks who are self employed or contract workers, and therefore not eligible for group health plans, cannot afford health insurance on their own and take the risk that their health will be okay until Medicare kicks in, or stay tied to the job that provides their health insurance. |
“I do this exercise with my clients where I give them a list of values and I ask them to rank, in order, their top 5 values. One of them is health. Health is one of those in the top 5. I have people who do it every year and health moves up the list. As they get older the only thing they can’t buy is their health. If you talk to older folks, health is so important, but when you’re young it doesn’t seem like the most important thing. I’ve seen enough health issues to value what I have. People don’t make it a financial priority the way they need to. You only get one body and if you don’t take care of it you’re not going to get another one and you’ve got to live with it for the rest of your life.”
-Lauren Gadkowski Lindsay, CFP®, NAPFA Registered Financial Advisor, Personal Financial Advisors
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There are many different stories of people who do not have health insurance and their reasons why. Whether to purchase health insurance and the cost of it is a major topic of discussion throughout the United States. Figure 1.2 lists the biggest risks of not having health insurance, some less obvious than others.
Biggest Risks of Not Having Health Insurance
1. Illness could bring a financial drain or financial ruin to you. Personal bankruptcy is frequently a consequence of a medical problem – and lack of insurance or lack of enough insurance can be part of the problem.
2. If you change your mind, you may not even be able to get coverage.
3. According to the Institute of Medicine, by skipping care when a condition is more treatable you have a statistically higher risk of dying when you don’t have health insurance.
4. Skipping preventative care because of cost fears may lead to serious and expensive problems.
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Figure 1.2: Biggest Risks of Not Having Health Insurance
| Think about whether your parents, grandparents, or great-grandparents had health insurance. I can’t remember my grandparents having health insurance. It wasn’t that they were too poor to have it, although they might have been. It is more likely that health insurance was not widely available. Yet they managed to live well and live long. They didn’t have any major health episodes that broke the bank except at the end of their lives. I don’t know that they ran out of money, as much as their bodies didn’t last. Medicine can’t cure everything, especially when dealing with some less than optimal life habits that can reduce health, like smoking, eating fatty/cholesterol laden foods, and not getting enough exercise. |
Massachusetts has a penalty on individual income tax if you don’t have health insurance, or don’t have enough. It is in the $200 dollar range this year. |
“Are you looking for insurance to cover you in a catastrophic situation so you don’t have to sell your house and everything you own, or do you think you’ll be taking the kids frequently enough that copay options might be viable?”
-Dianne Lawton, Former Director of Individual Sales, John F. Sipp & Associates |
As a parent with young children, I buy health insurance, as I might reasonably be expected to do. I have three children in school right now, and they are always in need of a little something here or there as strep throat, flu, and other maladies are passed from one child to the next. The wellness visits (annual checkups) are also important for everyone in the family – as we believe more in prevention than correction after the fact. |
If you don’t have health insurance in this country and need medical attention, the doctor will expect you to pay a much higher rate than they’ve negotiated with the major insurers. While this is unfair for customers paying cash, it is due to the leverage that the insurers use to negotiate the rates down for their benefit. Since the individual does not have much leverage, and is less likely to pay the bill, you can see why doctors’ offices do this. If you want to negotiate the fees, you’ll have to do that with the office manager in advance of the appointment – if they’ll even negotiate – and continue to negotiate with everyone in the healthcare chain, including labs, hospitals, pharmacies, and so on. If you try this route, you’ll want to keep track of all your negotiations in writing.
| Would you expect to have a major operation if something went wrong, or have other extreme measures to save your life? If so, then you will want some level of insurance. These heroic procedures that can save your life and prolong it can also bankrupt you if you don’t have some level of catastrophic insurance. But if you’re in reasonably good shape, lead a healthy life, and don’t have a family history of major disease that is not preventable, you might briefly consider the possibility of doing without insurance, although I wouldn’t – I don’t like to live that dangerously. You may be eligible for Medicare when you reach the current eligibility age of 65, and the hospitalization (Medicare Part A) might not even cost you anything if you’ve worked the equivalent of ten full-time years, though you’ll need to pay for the doctors office and prescription portions of Medicare yourself, and get a Medigap policy to further reduce your risk. The fears of the cost of insurance is enough to keep many chained to their workplace until regular retirement age. |
Percent of Uninsured Individuals, by Age
from U.S. Census Bureau Statistics
Age Range - Percent Uninsured
Under 18 years - 11.2%
18 to 24 years - 30.6%
25 to 34 years - 26.4%
35 to 44 years - 18.8%
45 to 64 years - 14.6%
65 years and older - 1.3% |
One health insurance agent told me that he thought because I kept the COBRA coverage from my previous employer (the option to keep health insurance from an employer where you pay the full amount that the employer pays) for so long was because we had health problems. Most folks only keep it for a few months until they find something else, unless they have a medical condition that would prevent getting individual coverage.
One of the most difficult things to overcome when purchasing health insurance is a pre-existing medical condition. It also happens to be one of the most popular reasons why some people fear being unemployed, because they or a dependent have a pre-existing condition that would limit their available health insurance options. You’ll find more information about pre-existing conditions and coverage for those with a medical condition in Chapters 2, 6, 9, and 10.
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