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The State of Personal Health Insurance

Posted on April 1, 2016 by Randy Cox   (all articles)

Is it for me? Is it worth the cost? These are questions increasingly being raised by individuals (and even employers) as the effects of Obamacare on individual health insurance are in their third year.

In addition to the roughly 2 million full-time-equivalent workers that the recent CBO report projects the labor force will lose by 2025, there has been and will continue to be an enormous cost to health insurance plans under the "Affordable" Care Act.

The system itself is becoming so costly that over half of Obamacare’s co-ops collapsed in the 2nd year, most of them in the last few months (and providers who took their clients may end up stuck with the bills). Larger insurers like United Healthcare are also looking at pulling out of individual exchanges due to growing losses that are looking increasingly like they won't be fully repaid by taxpayer monies. "We can't sustain these losses. We can’t subsidize a market that doesn’t appear at this point to be sustaining itself,” United's CEO said last month.

The market is simply composed of too many sickly people and not enough healthy ones. Sign-ups are well below even the most conservative estimates. By the end of 2016, there will be only 10 million people enrolled in Obamacare policies, the Department of Health & Human Services recently projected. In March 2015, the CBO had projected 21 million people would gain coverage through Obamacare’s exchanges in 2016. That's a pretty big drop in expectations.

The result is that costs are going through the roof. Premiums will increase an average of 7.5% for the benchmark silver insurance plan in 2016 in the 37 states using the federal Obamacare exchange, according to the Department of Health and Human Services. In several states the increase will be more than 15%, and as high as 36% in Oklahoma -- in one year! And these are plans with a sizable deductible. Some families are paying over $15,000 just for insurance, with up to $20,000 out-of-pocket before insurance does them any good.

If you're thinking that's too much and that you'll take your chances, you're not alone. All the publicity about a big reduction in the uninsured rate appears to be mostly hype. Avik Roy at Forbes writes, "All of the disruption, spending, taxation, and premium hikes in Obamacare has only reduced the percentage of U.S. residents without health insurance by 2.7 percent, from 13.9 percent to 11.1 percent: a remarkably small reduction, and far lower than what the law was supposed to achieve."

For those on a tight budget, there are some options.

Option 1: Cash pay. Subscription-based or a la carte cash-pay physicians are cropping up in all 50 states, as are cash-pay dentists and co-ops. Some sites like Pricing Healthcare are beginning to list some of these online so they're easier to find. More and more surgery centers and hospitals are listing cash-pay rates for patients (including for those with high-deductible insurance plans), and even offering loans and other payment options. Dozens of patient advocates are cropping up who can help negotiate and reduce your medical bills after the fact, sometimes saving patients thousands of dollars. There is a growing chorus of patients and professionals begging Congress to bring back support for catastrophic insurance plans, which would complete this option. It is not being considered by the current White House because it would spell doom explicitly for Obamacare by its biggest supporters. New recruits in the Democratic party appear to be more open to the idea.

Option 2: Health-sharing ministries. There are at least 5 organizations nationally that are approved by the federal government (the penalty for not having health insurance is waived) who allow individuals to pool their resources and help each other with medical costs. Some of these require a Christian faith, but some only require you maintain a somewhat healthy lifestyle. Samaritan, CHMinistries, and Liberty Healthshare are a good place to start. The idea is that you pay cash for small things, plus a monthly fee to the ministry which goes toward the high costs a small percentage of members incur each month. The monthly fee typically caps out below $500 per month for families, lower for individuals.

Option 3: Employer help. While this post is primarily about individual health plans, more employers are jumping on the bandwagon of helping their employees with healthcare costs and insurance. As healthcare costs rise for them however, some of these may cancel their employer plans and tell employees to seek a susbsidized Obamacare plan.

The higher costs go for exchange plans, the more people will look at going without insurance altogether. The question is, will there be affordable options to receive any kind of care going forward? And if there are, how will they find them? Pricing Healthcare hopes to be a resource for individuals struggling with questions about personal health insurance.