Why People are Choosing to Remain Uninsured Under Obamacare

The New York Times today features a lengthy
article
profiling individuals who chose to remain uninsured this year under
Obamacare.

For most of the people who appear in the story, it’s a financial
decision. They have tight budgets, and health insurance remains
expensive under the Affordable Care Act, even with whatever
subsidies they may qualify for. 

Cost is the most frequently raised issue, but it’s not the only
one. One Kentucky man featured in the story says he was put off by
technical troubles; he had decided to purchase insurance, and he
had selected a plan with what he thought was a fairly low
deductible. But that deductible, the Times reports, was
“miscalculated because of a programming error.” He ended up
deciding not to enroll in new coverage through the exchange this
year. 

And then there’s the story of Tammy Williams, a woman from
Washington state who “based her decision to opt out partly on
philosophical resistance to the law.” Here’s her story:

“The government comes into our life and makes these decisions
for us without even asking us,” said Ms. Williams, 56. “It just
makes me want to rebel.”

Ms. Williams, who earns less than $40,000 a year at a small
marketing firm in Seattle, said she did not want to hand over what
little discretionary money she had after rent and other living
expenses to an insurance company. She has been uninsured since
moving a year ago from Ohio, where she had a job with health
benefits.

She qualified for a subsidy to help buy coverage through
Washington’s marketplace, but said that she still would have had to
pay around $135 a month for the least expensive plan, with a $6,000
deductible that she said made it unfeasible.

“I am opting out,” she said on the last day of the enrollment
period, adding that she might instead buy dental coverage outside
the marketplace to take care of a chipped crown and a cavity.

A political independent, Ms. Williams said she at first chided
herself about not buying coverage, thinking, “There’s plans out
there that make it a good thing for people, and I’m just going for
rebelling against the government.”

But when she looked closely at the costs, she decided her
resentment was justified.

“If given a voice — ‘Do you want to participate or not?’ — I
would have said no,” Ms. Williams said. “But I don’t remember being
asked.”

The piece ends with the story of Cindy Whitely, a Kentucky woman
who had initially thought she might go without insurance, but did
end up getting covered after her work with a home improvement
company dried up last winter. Less work meant less income, which in
turn meant a bigger-than-expected subsidy for her and her
family. 

But now she’s worried that she might lose her new coverage if
work picks back up, her incomes rises, and the subsidy is no longer
as big as it is now. “If work picks back up and I jump right back
up there,” she told the Times, “then I’m stuck.” 

That’s a pretty good illustration of the tradeoff the law sets
up between working more and keeping benefits. When people talk
about Obamacare’s potential negative effects on employment, this is
the sort of thing they’re talking about. 

But it’s actually worse than that. If Whitely’s
income rises enough this year, not only will her subsidy for next
year go away, but she may have to repay part of this year’s
subsidy. People who underestimate their income and therefore
qualify for a larger subsidy than their actual income allows can be
dinged by the Internal Revenue Service (IRS) for repayment.

This is not a small issue. As many as 40 percent of the
beficiaries who receive subsidies under the law may end up on the
hook for repayment, according to a 2013
Health Affairs study. Which means that if she ends up
with more work than expected this year, the extra subsidy that
Whitely was counting on to help pay for coverage might not really
be there at all.

Maybe all this will get sorted out as the law settles into
place. The IRS may just go easy on people who are on the hook for
repayment. But I wouldn’t be surprised if, in the years ahead,
these are the sorts of stories we hear more of when asking why some
people are still choosing to remain uninsured.