Health Insurance-I Got Mine, You Get Yours

Audio Version

April 3, 2012

Last week the U. S. Supreme Court heard oral arguments on the minimum coverage provision (individual mandate) of the federal Affordable Care Act. The individual mandate requires most individuals to maintain adequate health insurance coverage beginning in 2014. Under the Act, if you already have insurance through an employer-based plan or as an individual, you are already in compliance with the mandate. If you do not have health insurance, you will have to purchase it or pay a penalty.

Forcing people to purchase health insurance may seem unfair, but what about charging higher insurance rates to individuals not enrolled in employer-based plans. Self-employed and other individuals who do not have access to workplace health insurance coverage pay higher health insurance premiums than their employed counterparts. Also, unlike individuals in employer-based health insurance plans, individuals who try to purchase health insurance for their families can be denied coverage.

The Advantages of Having Employer-based Health Insurance

Individuals who have access to employer-based health insurance plans have many advantages over individuals who purchase their own health insurance:

  • They typically pay lower health insurance premiums. Most employees participate in cafeteria plans that allow them to pay their portion of health insurance premiums with tax-free dollars

  • They enjoy lower rates because their risk is pooled with others in the group. For example, a person enrolled in an employer-based health insurance plan and who has a chronic illness like diabetes benefits from healthy people in the group because insurers base premiums on how much coverage the entire group will use

  • They generally do not have to worry about being denied coverage for preexisting medical conditions. Most employer-provided health insurance plans removed preexisting condition provisions from their plans after the passage of the Health Insurance Portability and Accountability Act (HIPAA). And even when plans do limit coverage for preexisting medical conditions, the limit applies for a limited period of time or not at all; after which, the plan will pay for care related to the condition

  • They have broader health insurance coverage. Employer-based plans cover a wider range of benefits than individual policies. For example, coverage for care related to pregnancy is a routine benefit in employer plans, but must often be purchased as a “rider” in individual plans. These “additional” benefits mean higher cost for individual plan purchasers

  • They do not have to understand the confusing world of health insurance plans or navigate the difficult process of purchasing it on their own. They have knowledgeable people in their Human Resources departments representing their interest with the insurance companies

Consider Wisely Proposed Solutions to Health Insurance Affordability and Access

Some opponents of the Affordable Care Act offer solutions for obtaining affordable, comprehensive health insurance outside of the workplace. One of which is to allow individuals to purchase health insurance from any insurer, anywhere. Currently, you can only purchase health insurance in the state you live in, and states regulate the insurance market. Being able to purchase health insurance across state lines provides insurance companies with a larger pool of individuals to sell policies to.

Having more health insurance plan choices does not in itself lead to lower insurance rates. You can purchase low cost health insurance today; however, it will not offer you much coverage and may cost you more in the long run if you become seriously ill. Also, insurers that are allowed to sell policies across state lines may choose to sell policies to healthy people only, excluding those with chronic illnesses and the elderly.

Another proposed solution is to create high risk health insurance pools for individuals that are difficult to insure because they have chronic health issues. High risk pools already exists in many states and are mostly unaffordable.

Health Care Reform May Help The Individual Purchaser of Health Insurance

You do not have to be “for” the Affordable Care Act to realize the current system could benefit from a dose of fairness. Under the incentive-based Affordable Care Act, individuals who purchase their own insurance may find more affordable health plan rates, more health plan options, broader coverage options, and no preexisting condition exclusions. These individuals still will not receive the favorable tax treatment for the health insurance premiums they pay; that issue still needs to be addressed.

Share Your Thoughts About Health Care Reform With Your Elected Officials

If you are concerned about affordability and access to health insurance for everyone, share your concerns with your elected officials. Don’t know who they are? Log onto the web site for a list of current representatives.

The American health insurance system is expensive for everyone. We all benefit by making it more affordable, accessible and equitable. The individual mandate is about making everyone who can afford to pay for health insurance do so to ensure access for higher risk individuals and the rest of us.

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