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Not buying health insurance could cost you, too

11:38 am by | 0 Comments

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Going without insurance is going to cost most Michiganders, anyway -- even if they go the entire year without seeing a doctor.

Under the 2010 Affordable Care Act, nearly every American must carry health coverage or face a penalty.

Referred to as the "individual mandate," it continues to be one of the most controversial aspects of health care reform.

The penalty is designed, in part, to nudge reluctant Americans into buying insurance, especially young adults who may feel they don't need it. These people and their premium payments are needed to help pay for those who are older and generally need more medical care.

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Without participation from these young adults, exchanges will attract only old and sick people who will drive up premium costs and send the marketplaces into a "death spiral," according to David Hogberg, a health care policy analyst for the National Center for Public Policy Research.

But for too many young people, insurance won't seem to make financial sense, because the cost of coverage is so high compared to the penalty, Hogberg said.

He estimates that about 3.7 million Americans 18 to 34 years old will be about $500 better off if they skip insurance and pay the penalty instead.

Beyond the costs, it's about personal choice, said Alyene Senger, a research associate for the Heritage Foundation in Washington.

"There is a value to having health insurance, of course. But there's a difference between health insurance having a value for consumers and the government mandating you to purchase it," she said.

There are a few exceptions to the law. Federally recognized Indian tribes and those whose religion opposes health insurance are exempted from the individual mandate. So, too, are those so poor that even the most affordable insurance policy eats up too much of their income.

But for those who don't fall in an exemption, refusing to get coverage could cost them a penalty of $95, or up to 1% of their income, for the first year. Someone who makes $46,000 a year would pay, for example, $360 in a tax penalty, according to calculations by the Center for Healthcare Research & Transformation in Ann Arbor. The first $10,000 would not be taxed.

But the cost of that penalty is nothing compared to the risk of going without insurance, said Lori Rund, head of product management at Health Alliance Plan, based in Detroit.

"My big argument is 'What happens if something happens to you -- you're hit by a bus or hurt on a ski trip, playing basketball? It could be anything ... Are you putting your family or yourself at risk with a big debt?" Rund said.

One 2009 study concluded that 62% of bankruptcies were caused by medical bills and lost income because of health problems. Insurance, too, means access to doctors and preventative care -- mammograms, for example -- that may detect health issues before they become bigger problems.

"It's a personal responsibility issue," Suzy Alberts, president of the Metro Detroit Association of Health Underwriters.

Part of her job as a group benefits adviser at Comerica Insurance Services is explaining benefits and costs of insurance to employee groups. Even when employees have to pay just a sliver of the entire cost, some refuse, arguing they are responsible for their own health and they don't need anyone to tell them what to do, she said.

Yet if they get sick, loved ones or taxpayers will have to cover their bills. Going without coverage, Alberts said, is hardly responsible.

"It's like wrecking your car, and then going out to look for insurance policy on your car," she said.

Contact Robin Erb: 313-222-2708 or [email protected] Follow me on Twitter http://freephealth/ ___

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