Despite the everpresent danger of unexpected illness or injury, about 16% of the United States population has no health insurance of any kind. The bulk of these uninsured fall in a low-middle income range and are in their 20s or early 30s. The majority of them are employed full-time earning enough that they don’t qualify for Medicaid and they are mostly young enough that they don’t feel immediately threatened by major health issues (for demographic details see covertheuninsuredweek.org).
Well over half of the uninsured earn $15,000 a year or more, but work at jobs where no insurance is provided by their employer. At that income level they could probably afford some sort of basic health insurance, but at that income a budget can be tight and they presumably choose to spend on other perceived essentials rather than insurance. I know I lived that way for many years, because I was young and healthy and didn’t even consider the possibility that I might get sick or injured. I got lucky and never needed insurance. I’m not sure that everyone can count on that.
While others may need government assistance, the insurance needs of this large group could be addressed without government intervention, which would cut the population of the uninsured in half. Many of those in this group may not realize that it isn’t as difficult to get insurance as they think. There are ways to reduce insurance costs and alternative sources for insurance which might make you think twice about deciding that insurance is something you can afford to live without.
First off, consider the cost of not being insured. It may save you money in the short term, but that could all be erased instantly by one major illness or even a relatively minor injury. For example, a simple broken bone can cost as much as $5000 to treat in a hospital – even more if there are complications. That would exceed any possible spare money you might have and would likely leave you making payments to the hospital as high as you would have paid for insurance for several years. That’s a real budget buster, so maybe you would have been better off with health insurance.
So how do you afford health insurance? There are ways you might be able to save money. Driving an older car, cancelling your cable television, eating bag lunches – each of these could save you $50 a month. Taken together that doesn’t seem like a lot of money, but it might be enough to pay for a lot more health insurance than you expect.
In a recent article, BusinessWeek had some suggestions on how to make health insurance more affordable.
For example, if you’ve lost insurance because you changed jobs you can use the COBRA program to keep that insurance for up to 18 months, but payments are often higher than you may like.
One constant problem is the higher expense of getting insurance without being part of a group plan. But there are ways to get into a group plan. Some membership stores like Sam’s Club and Costco sell decent no-frills plans at reasonable prices with premiums as low as $50 a month for limited coverage with a high deductible. Local community groups, professional organizations and student groups may also provide access to group plans.
They also suggest using a Health Savings Account to put money aside against medical expenses tax-free, which can help if you have no insurance or to supplement insurance with a high deductible or copayments. Of course, if you are having a hard time finding money to pay for insurance you’re going to have a hard time putting money aside for a HSA. But HSA money can be transferred into a tax-free retirement account if it isn’t used, which is more attractive than just seeing your money vanish into insurance you never use.
They also point out that if you need health insurance more than you want a full-time job there are some employers who offer group health insurance to part-timers. Starbucks is a good example of a company that does this, not to mention having a 401K and stock options. This is a great option for a family with one parent who works full-time and one who wants to stay home with kids at least part of the day.
The BusinessWeek article mentions this, but doesn’t go into much depth. In a lot of states there already are programs to help out those in the gray area between Medicaid and being able to easily afford health insurance. They mention a plan called Dirigo in Maine, but there’s an even better system in Washington State which offers both cooperative-based community healthcare and subisidized low income healthcare from their Health Care Authority. Almost every state has subsidized health insurance for children under the CHIPS program, and many offer family plans as well. This sort of program usually has a maximum qualifying income, but it is much higher than Medicaid’s cut-off.
One other option is to just go looking for individual or family health insurance either with an independent broker or through the internet. BusinessWeek sort of glosses over this option, but it’s much more viable than you may realize. The idea of group health being the only way to get a good rate is really quite outdated. Websites like eHealthInsurance.com offer a wide selection of plans from lots of different reputable insurers in an a-la-carte format which lets you find the insurance that’s right for you.
Despite the hand-wringing over rising insurance costs, the quotes I’ve gotten online suggest that almsot anyone earning that hypothetical $15,000 a year income ought to be able to afford passable health insurance without cutting too many expenses. For $150 a month or less they can get surprisingly good coverage. For example, a 27 year old male has a choice between plans with high and low deductables and with and without a copayment at a price under $150 a month.
Basically, the higher your deductable and the higher the copayment the lower your monthly premium is going to be. You can trade off deductable level against copayment level to find the right fit. I would advise against a percentage based copayment under any circumstances, because it could leave you paying a very large bill for a major operation.
A plan like the one offered by Blue Cross/Blue Shield for $112.50 a month with no copayment and a $1500 a year deductible would certainly be sufficient for most. If you really want to just be covered for maintenance and real catastrophes there’s an Aetna plan with a $56 a month premium with no copayment and a $5000 deductible. The no-copayment plans also usually have no cost for doctors visits as well.
The high deductible is where a Health Savings Account could come in handy. If you took the $56 a month plan and put another $50 a month into the HSA you’d be in good shape after a couple of years. And even if you had to pay some or all of the deductible out of pocket, it’s a finite one-time cost no matter how much medical treatment you need.
So the question is why, if you can get decently insured for about $100 a month, are so many people who can afford it going on living without insurance? It’s likely a function of ignorance and the feeling that they are young and healthy and invincible, but it’s not really because they can’t afford it. Increasing public awareness of both the need for insurance and the options available at reasonable prices could potentially cut the number of uninsured by half or more. Unfortunately the people who could benefit from this advice probably aren’t reading this weblog and they certainly aren’t reading BusinessWeek.