Americans Who Can Are Dropping Medical Insurance

Authored by Jeffrey Tucker via The Epoch Times,

Have you observed what is happening with medical insurance in the United States? There is an upheaval taking place. You might be experiencing it yourself.

The Wakely Consulting Group has taken upon itself to track trends in the medical insurance market, both pricing and participation.

Their latest report has documented an ongoing and profound shift, one so dramatic that it portends something truly meaningful for the future.

Lacking serious reform of the system from Congress, it seems that consumers are taking matters into their own hands.

Congress declined to extend subsidies for the Affordable Care Act (ACA) starting in January. Consumers have examined their bills and plans in light of the price increases which range from 25 to 115 percent depending on conditions and levels. More than a million people have dropped their coverage entirely. More will do so through the end of the year.

Wakely comments: “Based on unique data collection from 80 percent of the ACA individual market, Wakely … estimates a material reduction in enrollment for 2026, ranging on average from 17 percent to 26 percent in total.”

This is happening because, fortunately, there is no individual mandate to be enrolled in anything since the Supreme Court deleted that portion of the program.

Individuals are downgrading their coverage to plans with fewer benefits and higher deductibles. Or they are just doing without and paying cash or shopping for crowdhealth options.

The implications for the ACA, also known as Obamacare, are profound.

First, this changes the risk pool calculation in ways that are disruptive. The whole machinery fundamentally depends on large risk pools that mask costs and separate premiums from actual individual circumstance. With such large pools, the architects hoped to take a sideways route to a privatized form of socialized medicine.

That scheme now lies in tatters.

Second, with so many people leaving (obviously those who don’t anticipate system needs) those who remain in the system are less healthy: the very people more willing to pay the higher premiums are those who expect to use the services. From an actuarial point of view, this change puts further pressure on prices. And with risk pools shrinking and data pointing to higher costs, we have a system that seems to be eating itself on both ends.

You would think that the implosion of the medical-care system of the world’s biggest economy would be big news. Somehow it is not. Why has this not been widely reported?

A theory as to why: It is happening too slowly and with too much data diffusion. It is genuinely difficult to get a handle on the pace of the increases because every state is different, every age group is priced differently, and the diversity of real-world experience not only differs on the household level but even on the event level.

Which is to say, you never know until it hits you precisely what you will pay given any particular medical-care event. As for the premiums and deductibles, people are remarkably unwilling to share personal stories of what they face due to privacy concerns and also some element of personal shame related to financial burdens.

The system as it stands is so enormously complicated that hardly anyone can really understand the whole, much less characterize the aggregate experience with the sector. It keeps growing larger, more expensive, and more exploitative, but also more complicated and diffuse, leaving writers like me ever less willing to make a judgment on it.

Price indexes themselves are a mess because of the way adjustments in the data are made, even as regulations and restrictions protect the industry against mandates for disclosures. Just getting the data is a gigantic challenge, as anyone can tell you who is currently trying to reform the system.

Regardless, the experience this year has been bad enough to cause many families to throw in the towel and simply decide what they had previously believed was unthinkable: just bailing on the entire thing. People with employer-provided health care cannot do this for now but those on contract income and with companies with fewer than 50 employees can make choices to change providers or consider opting out completely.

I’ve spoken to many people about what all this implies. What could it mean simply to go without medical insurance at all? It means saving a vast amount of money during extremely hard times. For a family, premiums can be higher than a mortgage on a home, and that is before a single medical service has been used. Once you use it for any reason beyond a simple checkup, the costs only mount from there.

The cost is the fear of a catastrophic event that would lead to utter bankruptcy. But with premiums rising so quickly, many people feel like taking that risk is worth it. If there were catastrophic plans available that did not include the supposed benefit of wellness checkups and preventive care, they would be seized up immediately by millions.

Sadly, the entire system is designed to nearly exclude access to such plans, precisely because that would only shrink risk pools further and drive up costs. A rational reform would simply open up all medical insurance markets but too many in industry perceive that as a threat, which is why this solution is not considered politically viable.

If you have a substantial amount of savings for a rainy day in the bank, the risk associated with dropping coverage entirely is certainly worth taking, Clearly plenty are doing so. Among them, they have discovered that presenting yourself at the doctor or hospital as an uninsured patient causes the costs of care to be quoted as far less than the insured price. Sometimes the cash-only savings can be 50–80 percent.

Everyone knows this. It’s a remarkable fact and very obvious evidence of legal and permissible gouging. Still, it goes on as if it is just fine.

Hence, there can be a major financial advantage to going without insurance entirely. It’s often the case that cash can get you a better deal for a car or a home, but it is true many times over with medical provision. If you are willing to leave the country, the savings can be far greater still.

This is precisely why so many are choosing this route rather than paying sometimes thousands of dollars a month for coverage that they do not use. Other options that people are looking at services like Direct Primary Care, where you pay only $100 a month to have constant access to a prescribing physician who knows your health care needs.

A major beneficiary of these trends are crowd-health services, the new kids on the block that are disrupting the entire industry. It is not insurance. Those who subscribe present themselves to service providers as uninsured and hence benefit from far lower prices. The company then negotiates prices for you, covers them under most conditions, and charges separately for known costs such as pregnancy.

It’s a new model that works with the existing system. If we had reforms that permitted broader Health Savings Accounts, and rewarded opt-outs for employer-provided plans, the crowd health model could reform the entire system. For now, it is a niche market but could be vastly larger by year’s end when many more millions will simply leave the system entirely.

Under current trends, you can see what’s happening here. The system is reforming itself without the permission of the politicians. More of this would happen with some simple reforms like broadening health savings accounts, permitting purely catastrophic coverage, and permitting premiums to adjust based on individual risk. Lacking such reforms, people are leaving anyway.

You might decide to make this choice yourself, provided you are able.