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Opting Out of Obamacare: When Penalties Are Preferable to Unaffordable Premiums

| November 20, 2016

obamacare optout

For the young and healthy, a cheaper and safer alternative. (Adrian Schiess)

Steven Lopez has gone without health insurance for 15 years, and the Affordable Care Act hasn’t changed his mind. Once again this year he will forgo coverage, he said, even though it means another tax penalty.

Last tax season, the 51-year-old information technology professional and his family paid a mandatory penalty of nearly $1,000, he said. That’s because they found it preferable to the $400 to $500 monthly cost of an Obamacare health plan.

“I’m paying $6,000 to have the privilege of then paying another $5,000 [in deductibles],” said Lopez, who lives in Downey, a suburb of Los Angeles. “It’s baloney — not worth it.”

While millions of people have gained coverage through the Affordable Care Act, an estimated 28 million Americans remain uninsured. And preliminary data shows that about 5.6 million paid a tax penalty rather than buy health insurance in 2015, according to The New York Times.

In California alone, 3.8 million people under 65 remain without health insurance.

Now, amid the uncertain future of Obamacare in a Trump administration, some resisters like Lopez are feeling vindicated and other consumers simply don’t see the need to sign up. Still others, according to Affordable Care Act advocates, are eager to take advantage of what will likely be at least one more year of subsidized coverage.

Doreena Wong, a project director at the Los Angeles-based nonprofit Asian Americans Advancing Justice, said consumers have already begun to express doubts on whether they should bother enrolling. That is despite redoubled efforts in recent days by the state and federal exchanges to encourage signups.

“I do think the election result will impact our ability to enroll as many people as we’d like to,” she said. “Some people may ask: If it’s going to be dismantled, why sign up?”

Weiyu Zhang, a health educator and enrollment counselor with Asian Americans Advancing Justice, has enrolled 10 people since the election.

“Every single one has brought up the election and has expressed concern about signing up,” Zhang said. People are asking whether subsidies might go away and whether premiums will rise or fall, Zhang said.

“Based on my knowledge, there’s only so much I can tell them,” Zhang said. “What we know is that changes will not happen immediately, and if they want coverage in 2017, they should sign up.”

Getting rid of the ACA in its entirety on day one of the Trump administration is practically impossible, said Erin Trish, an assistant research professor in public policy at the University of Southern California. Although Republicans to date have offered no official replacement plan, what’s expected is a different approach with a less regulated health insurance market, Trish said.

Even before the election, health policy experts believed the 2017 enrollment period, which ends Jan. 31, would be key to determining the future of Obamacare.

“Would people enroll? Would premiums stabilize after this year and increase at a normal pace? What would the risk pool look like?” were questions experts were already asking, Trish said. “But this election has definitely thrown things for a loop.”

She said the election’s effect on this year’s open enrollment period could go either way. Rather than opting out, many people might consider it important to get covered in case ACA replacement options hinge on whether people had coverage in place, Trish said.

According to the U.S. Department of Health and Human Services, more than 100,000 people signed up for coverage the day after the election.

“Maybe people see this as one last opportunity, or perhaps they want to show their support for the ACA,” Trish said. “Who knows?”

Lopez said repeal is fine with him. Being penalized for not being insured is absurd, he said.

“We should not be forced to buy health insurance. The government should not be in the business of forcing us to buy anything,” he said.

Yet, even as a critic, Lopez does see some positive in the health law. He believes getting rid of the preexisting condition exclusion, for example, was a good thing.

So what happens if Lopez becomes ill? He must pay out of pocket.

Last year, he needed a colonoscopy. The best price he found was at a community clinic, where the procedure would cost him $2,000.

Not satisfied with the price, he traveled south to Tijuana. There, $2,000 covered a lot more: the colonoscopy, an electrocardiogram and hemorrhoid surgery, which he had been putting off because of cost.

If necessary, he’d do it again, he said.

For most Americans, cost continues to be the top barrier to health coverage. In 2015, 46 percent of uninsured adults of varying ages, ethnicities and income levels said they didn’t have coverage because it was too expensive, according to a Kaiser Family Foundation survey. (Kaiser Health News is an editorially independent program of the Kaiser Family Foundation.)

Kathy Eller, 56, a janitor from Paducah, Ky., hasn’t had insurance for more than a decade, and she plans to opt out this year as well, she said. Sometimes she worries about her health, but not enough to pay a $250 monthly premium, which is what the most affordable Obamacare plan would cost her, she said.

“I smoke way too much and I’m overweight,” Eller said. “I go to the doctor once every six months for my high blood pressure medication and only pay $50 for it.”

Before she lost her employer-based coverage 10 years ago, Eller underwent several surgeries for a skin infection caused by a bacteria known as MRSA.

If she were to get severely ill again, she wouldn’t be able to pay for it, and she doesn’t think she’d seek treatment.

“The way I see it, I’m 56, and my family doesn’t live very long — into their 60s, maybe 70s,” she said. “I wouldn’t want to put that financial burden on my husband, he doesn’t need that.”

Last tax season, Eller was fined close to $800 for not having health insurance. Eller said she is indifferent to the possible repeal of Obamacare. “It hasn’t helped me much, but I know it’s helped a lot of people,” she said.

Shannon Drees, 26, a student from Orlando, Fla., hopes possible reversal of the Affordable Care Act could lower premiums for young, healthy people. She has not had health insurance since she was 21, when she was dropped from her parents’ plan before the ACA provision allowing young adults to stay on those plans until age 26 took effect.

“I don’t have outstanding health issues, it’s much cheaper to pay a penalty,” she said.

Last tax season, she was fined $500. That’s still less expensive than the estimated yearly cost in premiums for plans she looked into, she said.

Many of her friends, about the same age, are in the same boat. Unless they are covered by an employer, they are not insured, she said. She said she does not visit the doctor much and uses Planned Parenthood for birth control.

“For me, it’s about the math,” Drees said of getting health insurance. “Hopefully one day I’ll be able to afford it again.”

–Ana Ibarra, Kaiser Health News

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13 Responses for “Opting Out of Obamacare: When Penalties Are Preferable to Unaffordable Premiums”

  1. r&r says:

    At the time the when that Obama care bill went to congress for approval, the leader Pelosi when asked what’s in the bill she said we DON”T KNOW we’ll read it after it’s approved. Great leadership hah.

  2. James Joy says:

    Obamacare is in a death spiral. As anyone in the insurance industry will tell you, there is no recovery from that. Left untreated, all healthy people exit while sicker ones stay on. Unsupportable model from the standpoint of cost. The program is fractured beyond repair. The “penalty” features are one main contributor. The way employer based health insurance works, the way it has always worked, is that younger, healthy folks subsidize the older less healthy folks. Employers pay premiums for all employees. Younger and older. Makes it affordable for all in the pool. The basic problem with Obamacare is all over this article but never actually said. Namely, if folks have health issues, they definitely buy coverage. If they don’t have health issues they will not buy. It’s the value proposition. Which way costs buyers less. The “mandate” or penalty provisions has no meaning. The whole point is people need to believe that there is more value for them having the insurance than not. It means that higher mandate penalties are needed to move younger, healthier people into the program. They must believe there is more value to them having the insurance than not. Sorry, but that’s the real world.

  3. Anonymous says:

    And the American taxpayer ends up paying for the decision that these people make to go without health insurance. When they get sick and need medical attention, or someone has an accident, many of the uninsured end up in the ER, especially since many tend to wait until medical issues/concerns get so bad/emergent that they can no longer be ignored. When they cannot (or will not) pay the resulting bill, other consumers make up the difference. That is what raises overall medical costs. That is exactly what has made them sky-rocket in the past and, if they get rid of Obamacare (particularly with nothing to put in its place but the same old, same old)), it is what will inevitably happen again. Healthcare costs overall decreased as more and more people became insured. Obama was derelict in not shoring up the program when he should have been doing so. Now, it will gutted and we will back to the same critical place we were before…Or,. as Republicans like to put it, “the good old days.” Older people on Medicare need to realize that younger consumers will not remain content to pay for seniors’ healthcare upon demand (with a full menu of options unavailable to younger consumers) though taxes while they have fewer and fewer options available to them. It’s unfair. Everyone needs to be able to have equal access to care in a way that is both reasonable and affordable. Wake up!

  4. Edith Campins says:

    Healthcare premiums and conditions are even worse outside of Obamacare. ALl healthcare premiuns go up year over year.

    The Democrats tried for years to improve Obamacare but the Republicans stonewalled them. Instead they tried repeatedly to repeal it, WITHOUT OFFERING AN ALTERNATIVE OF THEIR OWN.

    But just wait, the orange one has said he is going to make it better and cheaper. “it’s going to be great”
    Don’t hold your breath.

  5. Anonymous says:

    Scroll back up and read about Kathy Eller, 56, from Paducah KY., who claims she “smokes way too much and is overweight” but can’t afford $250 a month for Health Care premiums. At $5 a pack for cigarettes she’s likely spending more than enough on smokes, which are killing her, than health insurance would cost her.

  6. footballen says:

    All I know for sure is that since Obama care was rammed down our throats my health insurance got alot more expensive both in premiums and in slashed benefits with ridiculously high co-pays. It did not help me or my WORKING family at all. I know lots of bums who do not work that have babies for free with it though. I have to pay for my insurance and I still get stuck with thousands of dollars for having a child while bums get the same thing for free. Incredible!!!!!!!!

  7. Ws says:

    So many people I know do not have medical coverage because they cannot afford it. Hopefully Trump will get rid of Obamacare and replace it with something better and more affordable. Let people just buy catastrophic
    insurance if that’s all people can afford. Stop telling people they have to buy a plan that includes everything but costs too much to afford. It’s common sense which Obama doesn’t seem to have. Thank goodness Obama is out soon. He has caused this country too much harm over the last 8 years. Stop paying for illegals and there will be more money for US citizens. GO TRUMP!!

  8. Anonymous says:

    Obama care is a disaster just like Trump said. It can’t come soon enough before it is replaced. The two issues that Trump wants to keep for the people are good things and will provide a great benefit to Americans. That’s what its like to look out for the people.

  9. OMG says:

    The easiest way to have covered all those people was to enhance medicare. Make it a premium based policy based upon income and leave the free market alone.

    That would have done the very same as what we have now. Most of those who could not afford insurance ended up on medicare and those who could afford can no longer afford what they had.

    So again the middle class was screwed by this .

    The big plus would have been our premiums in the private market would not have SPIKED like hey have over the last few years.

  10. KB63 says:

    It is a disaster. For the first time in 35 years I will not have health insurance. I will exempt out. My premium has went from $285 to $565.00 (2017 rate) in 4 years. My pay certainly hasn’t went up that much. I have paid $460 every month in 2016 – with an outrageous deductible for Humana to cancel the policy for 2017. Combine that with my husband’s health insurance of $817 per month and it’s way over the 9% of our income. Do I want to go without health insurance? NO! But I simply can’t afford to pay this much for it and I have no medical issues so I have to take my chances. It’s people in my situation, those who have always paid their fair share, worked hard, that they are destroying. I just don’t understand.

  11. rst says:

    Trump doesn’t have to kill Obamacare on day one; people will opt out of it because they’re uncertain if it will be in existence long-term. That, in itself, will kill it; it’s called: lack of participation…

  12. NS says:

    Forced Commerced = Absolutely Un-American

  13. Anonymous says:

    All you Fox-News-watching seniors out there who are crowing about Obamacare being repealed because you foolishly chose to believe that it posed a threat your Medicare (which it didn’t.)…say “hello” to Medicare vouchers. Because that’s what you voted in when you voted for Trump. Karma and paranoid-driven selfishness go hand-in-hand. And you are about to find that out in spades.

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