ObamaCare: Paying the Same Amount For No Insurance As You Do Now For Having It?


In today's Wall Street Journal, New Yorker Andrew Heinze looks at how health-care reform could affect his future:

I'm a registered Democrat living in New York City, and I buy my own health insurance. But now, having seen the health-care reform bill that passed the House, I'm preparing for life without health insurance. And unless I'm the only person covered under the Empire Blue Cross/Blue Shield "Tradition Plus" plan, a lot of other people will end up just like me, uninsured.

I will gain one thing, though—an annual fine for losing my insurance. The exact amount of that fine isn't clear yet, but so far it looks like I'll be paying about the same amount—$2,000 a year—for having no insurance as I do now for having it.

Heinze, a writer, currently has a "hospital-only" insurance plan and pays for routine medical treatment out of his own pocket. By purchasing a hospital-only plan instead of a traditional comprehensive insurance plan, he saves $11,000 a year—comprehensive plans purchased on the individual market being enormously expensive in New York because of regulations enacted several years ago that have significantly driven up the cost of such plans.

Hold on a minute: Isn't health-care reform supposed to cover nearly everyone? That's certainly the idea. But coverage increases are achieved through a mandate: You are required to buy insurance or pay a penalty for not doing so.

The problem with mandates is that they require minimums. In order for the government to determine whether someone has successfully complied with the mandate, they have to determine what the floor is for acceptable coverage. And in the bills going through Congress, Heinze's affordable, hospital-only plan would be under the floor, and therefore off limits.

As Heinze explains:

The House health-care reform bill hinges on what it calls a "qualified" health-care plan. Individuals will be required by law either to buy a plan that meets the criteria of a qualified health-care plan or pay a fine. What are those criteria? They're the basic components of a comprehensive HMO-type plan, which means that Empire's "Tradition Plus" will not qualify because it covers only hospital costs. In other words, if President Obama signs into law the kind of health-care reform bill that is currently on the table, I will have only two choices: buy an expensive qualified plan or pay a fine for being uninsured.

Now, we are missing one piece of information here: Heinze's income. The reform bills do include subsidies to help lower-income people purchase those expensive plans on the individual market. Depending on how much he makes, he might qualify for some assistance. But those subsidies are based on multiples of the poverty line, which is federally defined and doesn't take into account regional variance in the cost of living. Heinze lives in New York, where housing and transportation are incredibly expensive and, in general, dollars just don't go nearly as far as they do in, say, Lexington, Kentucky. So it's entirely possible that Heinze makes enough money that he wouldn't qualify for a subsidy—but also wouldn't be in a financial position to easily afford insurance.

Reform advocates have argued that cases like Heinze's are the reason we need to increase funding for insurance subsidies. But that, of course, increases the overall price tag of reform and makes it even more difficult to achieve CBO-certified deficit neutrality. The politics, already dicey, just don't work.

But even more than that, Heinze's story exposes the fundamental absurdity of the health-care reform game-plan: New York's initial set of state-level reforms pushed premium prices high enough that Heinze decided to exit the market for comprehensive coverage. Yet the response from universal coverage boosters, as far as I can tell, is that we should expand those reforms to the national level, couple them with new mandates, new fees, and more government administration, as well as a massive amount of new spending—all so that we can get back to the point where someone like Heinze will either have to shell out far more money than he wants to for insurance, or pay a fine not to have it at all.

NEXT: Warning: Vending Machine Snacks Have Calories

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. Note to self:

    More guns and ammo.

    1. There may be a recession, but guns and ammo are selling like hotcakes.

      A solid investment and they will be quite useful when US dollars are valued at Zimbabaland levels.

    2. Guns? Useful for personal defense when we get to anarchy, but we’ll need high explosives to actually reach that state.

      1. whoever you are, you made my day.

  2. Heinz must have had this Tradition Plus Hospital Only plan for a while. I worked for Empire BCBS from 2001-2005 and when I started there you couldn’t buy that plan any more. He was grand-fathered in. My expectation is that even if he was forced onto a different plan and by some miracle ObamaCare were repealed, Heinz would not be able to get that coverage back that he wanted.

  3. all so that we can get back to the point where someone like Heinze will either have to shell out far more money than he wants to for insurance, or pay a fine not to have it at all

    Now you’re getting it, Peter. This is the entire point–to be just like Social Security.

  4. Nick,

    In article, he said he got it in 2006.

    1. Wow. I just looked at their site and they are, in fact, selling it again. Awesome for those that can get it. When I was there, they were only selling HMO’s to individuals. Only groups could purchase different plans, and even then they could only purchase HMO, EPO, or PPO unless they were huge and wrote their own benefit plans.

  5. I also have a minimal, catastrophic coverage plan. Hell, I’m only 27, fairly healthy, and I figure with an HSA I can easily keep a good amount in savings so that I can cover my $3,500 deductible should some serious shit go down. This plan runs me around $1,200/ year, which is perfect for my situation. I don’t mind paying for routine checkups and the occassional ammoxocillian out of pocket. In fact, being price sensitive, I have every incentive to be prudent about the use of my health care dollars and I don’t consume a health care service unless it is essential. If I get a cough, I don’t go running to a doctor. If I strain a hammy during softball, I don’t go running to a doctor. Its ridiculous some of the things that those in the comprehensive plans waste doctors times with. I sincerely hope they won’t pass this trash and force me to subsidize lavish “free” medical insurance which wastes precious and scarce health resources.

  6. The absurdity noted in the last paragraph is standard operating procedure for the left. For any social problem, 1) claim it’s a failure of the free market. 2) Have the government regulate, tax, and/or subsidize it. 3) When the problem gets worse, return to step 1.

  7. @Sudden. I also really like my HSA, and will be extremely pissed if it becomes illegal under ObamaCare.

    1. My company offers HSA as the only option. If that is taken away and replaced by a mandatory high-cost comprehensive plan (or fine), there will be about 6,000 very pissed off employees.

      1. Correction: Catastrophic + HSA

      2. Order 6000 guns.

        1. 6000 guns will probably cost less than a single on of your coworkers comprehensive plans too. Tis a wise investment.

        2. 6000 guns will probably cost less than the ammo for them.

  8. According to parts of bill I read, HSA’s wont be illegal, but they wont cover what they do now. For example, OTC drugs can no longer (if it passes) be paid for from the HSA.

    1. For me, its not about the HSA becoming illegal, its about the high-deductible plan becoming illegal. The reason I even bother with an HSA is because I consciously chose a high-deductible plan, deciding that I can pay most of my routine expense out of pocket (I don’t touch my HSA for OTC or even doctor visits, I save it for the potential emergency hosptilization bill). I don’t even care about the HSA other than the tax benefit, even if HSAs were illegal, I would still maintain a high-deductible plan and keep adequate savings to cover my max annual out of pocket in case the need arises. My whole point is I want to keep the coverage level that I deem adequate for my situation because it makes me a more savvy and responsible consumer of health care and doesnt force me to subsidize the hypchondriacs/victims-of-their-own-life-choices/and overconsumers among us.

      1. Shame on you for being responsible. Didn’t Newsweek tell you we’re all socialists now? Time to start mooching!

      2. I thought all HSAs were high deductible.

        But, yeah, I agree.

        1. I thought all HSAs were high deductible.

          Semantics. An HSA is an tax-exempt account that you only qualify for if you have a high deductible health insurance plan. You can also have the health insurance plan without the account.

          Many employers bundle together the high deductible insurance and a employer contribution to an HSA, however, and the combination is often referred to as an “HSA plan.” (“consumer driven health plan.”) Some employers, instead of a HSA, have a HRA– Health Reimbursement Account– which is like an HSA except that the employer technically owns the contribution, though the employee can use it on whatever.

          The Archer MSAs– Medical Savings Accounts– are similar to HSAs but older and without as good terms.

          There’s also FSAs– Flexible Spending Accounts– which come with fewer rules but are “use it or lose it” instead of rolling over.

          1. FUCK ALL THESE PLANS!

            Christ, just save some fucking money people. Or just die when the time comes. What the hell

  9. I don’t know how Heinz voted, but he says he’s a registered Democrat living in New York so it’s likely he voted for Democrats on the national ticket. If so, he’s getting exactly what he voted for — what’s the beef?

  10. The real tragedy is that the only way remotely politically possible to actually stem the rise in health care costs is to move away from comprehensive insurance and toward more consumer involvement in his own health care expenses.

  11. I don’t want comprehensive coverage. I don’t like doctors, and I won’t use all the extras. I can afford to pay what isn’t covered by my current, supposedly inadequate, insurance.

    This stupid insurance stuff is going to make me pay more than I can afford for something I would never use. The government is going to take a happy citizen who feels not rich, but definitely not poor, and make me feel like a degenerate who can’t even pay my own way. I don’t want “help” from the government. I want to be an independent, self-sufficient, productive member of society just like I am today. Leave me the heck alone!

    1. “I want to be an independent, self-sufficient, productive member of society just like I am today.”


        1. and He hates poor people.

          1. You’ll make Obambi cry. Shame on you.

    2. But if you only pay for the health care you need, there won’t be any money to subsidize all those uninsured sick people who will only sign up for treatment after they get ill.

      So the government has to subsidize you, so that you can subsidize others.

      That way, nobody will ever be denied treatment for anything, ever, and never even have to look at the bill, because someone else is always paying for it.

  12. I just checked to see how much an HMO for husband/wife/1 child is in upstate NY if purchasing on our own, and it would cost $2572.68/mo which is $30872.16/yr. This is why so many people are uninsured. If they don’t get coverage through their employer, there’s no way any reasonable person would pay that much when your odds of needing $30k worth of care in a year is slim. You’re better off not having any insurance and spend your money on alcohol so you don’t care any more.

    But state law prohibits people from forming large groups to negotiate better rates. And as everyone here has agreed, ObamaCare does not address ways to lower the cost of care. All it does is get everyone covered (or fined). People should have HSA’s like Sudden so they are incentivized to be wise consumers, not to mention healthier people.

    1. “You’re better off not having any insurance and spend your money on alcohol so you don’t care any more. ”

      Yeah, that’s my healthcare right there.

  13. Question: how will the government know if you have an insurance plan (especially if you’re self-employed)?

    Surely this mandate will lead to an unprecedented invasion of privacy.

    1. In Mass. we have to answer a question about it when we fill out state tax forms. My guess is that’s what they have in mind.

    2. The insurance companies will be required to report information for each person who buys approved insurance. The information shared should be much less invasive than a W-4.

      You also have to say whether you have insurance or not on your taxes. Lying could be construed as tax evasion, depending on the circumstances.

    3. I would imagine it will be like car insurance in Ca where the insurance company reports to the state computer every policy it issues. It will be a little harder to track down evaders because you aren’t issuing a license plate or sticker.

  14. Healthcare is just the ultimate flowering of liberal ignorance. Liberals are incapable of understanding that demanding that all of a product be gold plated causes the product to be more expensive and prices people out of the market. They honestly don’t understand how businesses or economies work. They think the reason why everyone doesn’t have perfect health plans is because evil greedy insurance companies refuse to care for people. They honestly believe that if you just mandate something it will be so. It is the same kind of boneheaded thinking that goes into raising the minimum wage. If we just demand that everyone make $10 an hour, everyone will have a job that at least pays that. So of course they think that demanding minimum health insurance will give everyone great health insurance for free.

    Some say that liberals are sinister and want to destroy the private sector and replace it with government. Maybe some are. But most of them are just profoundly ignorant.

    1. Yeah, the liberal logic re: the minimum wage tells me it should really be $100 or more. Then everyone would be a millionaire! You’re right: it’s the same fallacy that is behind health insurance reform (that and the equation of ‘health care’ with ‘health insurance’.

    2. They really are this fucking stupid.

      Ignorance is evil.

      1. Agreed. When it’s so damn easy nowadays to eliminate one’s ignorance, staying that way becomes evil.

  15. good…fuck Heinze…I hope he dies laying on the sidewalk waiting in line for health care. I’m tired of dumbass republicans and democrats being fucking surprised when one of their god damned socialist wars or programs turns out to be a big fucking lie.

    My health care will suck too, but at least whatever job I get working for the man will be better than his and thus I’ll get a slightly better package…plus if the global warming scam proceeds then I will make a killing off the carbon credits. When you can see what it is happening it isn’t too ahrd to make a career in one of the scams that is going on.

    The useful idiots will be destroyed as their usefulness gets worn out. Heinze is one of those idiots. It is the natural order.

  16. Somebody call the whaaaaambulance…

    He sounds like a racist too.

    Why does he hate Obama?

  17. Holy fuck government is stupid.

    I want to see bitch-boy Obama show up at people’s doorsteps and try to enforce that fine.

    1. Hate to break it to you, but obama wont be going door to door.

      They got an army ready for just that purpose.

  18. We literally just switched to an HSA with a high-deductible insurance policy specifically because the PPO was outragously priced and we were paying significantly more than we ever would use it! First thing we did – fully fund the HSA to cover our deductible! Good grief, why can’t the government understand that a high-deductible plan actually makes the most sense, even for middle and lower income folks? I absolutely don’t want to go back to a comprehensive policy – I don’t need it, thank you very much! What I do need and now have is risk aversion – coverage in the event something catastrophic happens, I’m covered, with no lifetime limit either! Policy kicks in only after DH and I hit our $6,000 out of pocket in a year, then it’s 80/20 until we hit $12,000 out of pocket…..I HAVE NO PROBLEM PAYING THAT!

    1. I forgot – our HSA cost us $6,000 to fund….our policy costs $4,500 a year, total was $10,500….next year we can continue to fund the HSA to the max (which we will), but if something were to happen financially, we’d only have to pay the $4500 for the premium – not the $13,460 we were going to be charged for the comprehensive plan!

    2. Some people only make $15,000 gross per year working full time.

  19. Couldn’t everyone just make sure to get their money’s worth by getting sick a lot?

  20. They are stuck in a catch-22. They want to force insurance companies to take on patients who are already sick.

    To do that, without driving the insurance companies bankrupt, they have to force people to buy insurance policies that are more expensive than they need.

    At the same time, they want to bring DOWN the cost of insurance.

    But if they bring down the ocst of insurance, there won’t be enough money to pay for treating all those sick people.

    Ergo, they subsidize expensive medical insurance for the lower-middle class and below. Ultimately, it’s all an accounting gimmick designed to move costs around in an attempt to magically cover sick people without doing any rationing or cost control.

  21. I’m on a waiting list for ammo.

  22. Well I guess I should stop exercising, start eating meat and have multiple sexual partners in order to get my moneys worth of Insurance. Because at the current rate I’ll loose money, and since I see an acupuncturist once a month, and I pay out of pocket; I’ve got some work to do.

    Better put on 150 lbs so i can get that government subsidized diabetic medication!

  23. To do that, without driving the insurance companies bankrupt, they have to force people to buy insurance policies that are more expensive than they need.

    More fundamentally, they are forcing people to buy insurance policies that are more expensive than they are.

    By not allowing insurance companies to recoup costs on the old and unhealthy (and comparatively rich), they force insurance companies to raise rates on the young and healthy (and comparatively poor).

    It’s sad, really, the plethora of new chains this legislation lashes upon the invisible hand…

  24. ObamaCare was written by the private health insurance companies for their own benefit, along with an “assist” from the drug companies and all of the other parts of the “Medical Monopoly” that makes US healthcare the most expensive in the world. Solution is to “break” the monopoly. Repeal prescription laws, allow importation of medical drugs from outside the US. and combine this with a computer program that is effectively a “doctor in your computer”. All of which is quite “doable”, but would be very strongly opposed by the monopolists themselves who profit from the way things are today…

  25. Well besides the cost of this Obamacare being something of debate, the Democrats are going to be struggling to do what Obama promised America, which is to reform health care by the end of 2009 – which is only a few short weeks away. http://www.newsy.com/videos/he…..rm_in_2009

Please to post comments

Comments are closed.