It was not that long ago that there was general agreement amongst the health care policy wonks that the “mandate was considered necessary for the market to work“. In reality what they meant to say was that the market needed both the individual mandate and affordable, unsubsidized health insurance to work. The Affordable Care Act(ACA) supporters realized that they could not deliver expanded benefits and affordable, unsubsidized health insurance. Expanding benefits was more appealing to their political base so they chose to kill the one thing that was essential for the market to succeed, affordable health insurance. So while the individual insurance market rotted away our courts debated whether the individual mandate was a “penalty” instead of a “tax” while maintaining that it was a valid exercise of Congress’s power to “lay and collect taxes”. The idea that the individual mandate was not as important as everyone claimed must be a grating reminder to Supreme Court justices like Justice Roberts who went out of his way to rationalize its legality. I wonder if the Supreme Court Justices learned anything from this exercise in futility.
The Irony of Repealing The Individual Mandate As Part Of A Tax Cut Package
Now after the ACA has blown up the individual insurance market, our legislators find themselves in a strange predicament. They cannot pass a health reform bill but they can pass a middle-class tax cut if they repeal the individual mandate. You got to love the idea of the nonpartisan Congressional Budget Office providing the intellectual foundation for repealing the individual mandate. What’s next? Repeal the Medicaid expansion because it would save the federal government even more money? According to their analysis, the primary source of savings comes from reduced subsidies due to healthy people leaving individual health insurance market. Avik Roy has more details in his Forbes article, How The CBO Drove Obamacare’s Individual Mandate Repeal Into Tax Reform. Although this sounds like a win-win situation, there are health insurance problems when you repeal the individual mandate. Robert Laszewski goes as far to call it a nightmare for the middle class. Then he backs off from this statement when he agrees that the repeal is good for the poor and healthy people. For the poor struggling with out of pocket costs, this is probably a better alternative than insurance. The group Mr. Laszewski says has the greatest risk are those healthy people whose income is greater than 400% of the Federal Poverty Level, who get sick, and do not have the money to pay for their illness. This sounds scary but for most major medical expenses, the combination of unaffordable health insurance and high deductibles puts this group in a more precarious financial position than going without health insurance. Earlier this year I wrote how we reduced the risk of this lesser evil.
In 2015 my wife and I came to the conclusion that the healthcare industrial complex would not willingly change their ways so we started building up our HSA. At the end of 2016, I asked our insurance company if they would offer me a lower rate. They declined and we chose to drop our health insurance. The markets are working, the customer has spoken, and our health policies are dysfunctional. Although we are nervous about our choice, we think we can do a better job managing our health care than the healthcare industrial complex. It is amazing how fast the money builds up when you divert your old health insurance premium amount into a savings account. I am mildly optimistic we can get better health care advice for non-emergency room treatments if we tell our health care providers that we are a cash customer. Every month we get by without a cancer diagnosis makes us a little more confident we made the right decision. If the insurance companies want us back all they have to do is show us an affordable health insurance plan!
In retrospect, we are a lot more comfortable with our decision now than when we started. We stuck to the plan and our emergency funds are in better shape. We are confident enough about our health that I am not sure an “affordable” health insurance plan could lure us back in. The only healthcare benefit we wish we had was the ability to add more money to our Health Savings Account.