Some defenders of the AHCA (the American Health Care Act) say “what good is health insurance you can’t use due to cost?” We address this question.

First, let me translate the charge, it is: That right now people are mandated to buy coverage that has higher cost sharing than they can afford. So, the idea is “what good is paying a premium for coverage one can’t use”.

That is a great point, so I’ll try to offer a few simple points that help frame the reality of insurance and which otherwise address the question:

  1. Part of what everyone gets with health insurance under the Affordable Care Act is free preventive services, a free wellness visit, and a maximum out-of-pocket limit under the ACA. That means premiums aside, there are some services that have no additional costs, and on the rest everyone is limited to spending X per year out-of-pocket. Thus, there is no infinitely expensive insurance, and without insurance there is no limit to what one can spend. So it is the difference between bankruptcy and not in an emergency, and even on a high-deductible plan one gets some benefits for the buck (more than can be said about car insurance which does nothing until you use it).
  2. Insurance with a high deductible doesn’t do much for a healthy person outside of tax advantages. A smart shopper with some extra bucks will benefit from a high deductible plan, as they get tax breaks from their HSA, catastrophic coverage, and will save some costs when they go to their physical and if they need the doctor. It isn’t a great deal, but it is a decent one for the healthy person with a few dollars to put in an HSA.
  3. Insurance for those with cost assistance who would other-wise be priced out of coverage (like the sick and poor) is not “too expensive” by most measures, it is far less expensive than it would be without it. For those in this group who need coverage, keep in mind that they are grappling with the same sticking point of cost. In other words, for the person who is not healthy or not young, they benefit greatly because even expensive coverage is better than the very expensive and bankruptcy inducing “not having coverage”.
  4. There are exemptions for those who truly can’t afford coverage and most people get their coverage through their employer. This means only a small section of the population is going to pay full cost for insurance and not have the money to pay the full deductible (or to get a lower deductible higher premium plan).

This is to say, there is a chunk of the population who struggles with costs and doesn’t get assistance, and their care is rationed based on their inability to pay yet they must get coverage or owe the fee. Honestly, that group is just in a bad place and I get why they would say “what good is health insurance you can’t use due to cost”, for the rest of America, the quip is almost an aside because the reality is that without the assistance or ACA or their employer or Medicare they would be even worse off.

Having coverage that you can’t use without really stretching one’s income and savings is hard, being barred from coverage and not getting assistance is 100% way worse. We are facing a choice between the two essentially in America, luckily the AHCA is more like an ObamaCare… but it itself has a lot of sticking points that give handouts to the rich and leave the middle class still struggling with costs (all while undoing safety net protections which catch the working poor when they fall).

People don’t seem to have a problem taking a chunk of their wages in an overpriced health plan, nor do they fuss and moan over car insurance or home insurance, but for some reason everyone is a critic when it comes to health insurance.

I get it, health insurance is expensive, and there is a lot to complain about, but there isn’t much grounds for concluding that the best way forward is by avoiding getting covered.

Insurance isn’t something you buy to use because you know you’ll need to use it (and to the extent it is, that is a big part of what jacks up costs), it is something you buy and hope not to have to use.

Health insurance is a bit like term life insurance, you are really hoping not to get the full use out of it.

We all pay into house insurance, flood insurance, car insurance, and a bunch of other boring financial products which do literally nothing for us but safeguard us in an emergency.

Health insurance is like this.

Explaining things beyond this insults your intelligence and mine, I know everyone knows the purpose of insurance if they think about it (and even with health insurance being a complex type of insurance, it still acts like an insurance).

We clearly have a healthcare crisis in the US where care is rationed by cost, but the AHCA isn’t fixing it and the ACA didn’t fully fix it either. Instead the problem is sort of going to get worse while politicians play politics with tens of millions of lives and pocketbooks.

High costs under the ACA aren’t acceptable, and care rationed by cost is a real sticking point, but the answer to being frustrated with health insurance isn’t just giving up and walking away. The thing about the complex healthcare crisis is: 1. it is complex and 2. it is here to haunt us until we deal with it.

People can’t make the choice not to need essential healthcare, insurance is a naturally socialist product with no purpose beyond helping people with unaffordable costs, when the premiums and deductibles ensure unaffordability it gets pretty existential, but the fundamentals don’t change. People don’t know when they’ll need essential health services and everyone needs basic health services so we all need to pool our money for the rainy day and that results in the young and healthy funding the old and sick. Just sort of the way it works.

What do you think?

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