ObamaCare's New Normal: The Healthy Self-Employed Now Pay For Their Sick Neighbors

by Dave Hamilton in ,

Finally the national discussion is beginning to address the big three-and-a-half year old elephant in the room regarding ObamaCare: many (most?) people with individual health care/insurance plans will lose these plans in 2014.

Note, for clarity: I'm not saying that we'll lose access to coverage. We'll simply lose the plans we have now and be forced to sign up for new plans.

This goes quite contrary to the talking point Mr. Obama liked to repeat, saying if we liked our health plan, we could keep our health plan. That's only true if you've had your health plan since before March 23, 2010 (when he signed ObamaCare into law) and if you haven't made any changes to your plan since then.

But we all know all this now. And knowledge is a good thing, though it's likely far too late to do anything about it for 2014. What's important is that we all understand why this must be so.

For Every Action There Must Be an Equal and Opposite Reaction

Perhaps the most popular bullet point of ObamaCare is the fact that it will allow people with pre-existing conditions to get coverage.

For the record, that's always been the case for people participating in group insurance, with their employer or other organization. For as long as I've been buying insurance (20+ years), group plans have had several mandates: they must cover everyone (even if that means raising the group's premiums to do so), they must cover maternity care, and there are minimum levels of coverage they must carry. These mandates were presumably put into place to protect unsuspecting employees from signing on with a company only to find out the company's health plan didn't carry something (or someone) they assumed would be covered. (I say shame on that employee for not researching before accepting the job offer, but ... I digress).

Prior to ObamaCare there were also such things as true "individual" health insurance plans: you'd apply and then go through an underwriting process where they blood tested you, drug tested you, and asked you a pant-load of questions after which they would come up with a rating. That rating would range from "preferred plus" with very low rates for people with no health issues at all to "no freakin' way" with very high rates (or a "no, thank you") for folks who were sick.

ObamaCare does away with this latter portion. No, I don't mean it does away with the latter portion of the last paragraph: it does away with the whole last paragraph. There are no more individual plans, no more underwriting, no more preferred rates for healthy people. In order to cover people with pre-existing conditions, we all will be placed into groups organized by locale: the healthy people will be put into groups with the sick people — and our rates are averaged out.

Individual plans were typically purchased by two groups of people: the self-employed and the unemployed (or retired). But since we all have to be in groups now it means that starting in 2014 healthy people will be subsidizing their sick neighbors' healthcare. If you, as a family, make more than $94k/year on paper you also don't qualify for any subsidies/discounts on your insurance, either. This paints a huge target on the self-employed as the source for funding this new provision of our national healthcare.

My family's insurance currently costs us $480 per month. We were (and still are, thankfully) quite healthy when we went through the underwriting process. Starting in August, 2014 (our plan's anniversary and now termination date) we will likely have to sign up for a plan that costs almost $1,000 per month. After all, I have to pay for my sick neighbors' health care now. It's how ObamaCare works.

You're welcome.