On the Morality of Insurance Premiums

As CVS-Aetna merger talks fill the air this Christmas season and experts weigh in on the impact this will have on the economy and consumers alike, I’m sitting at a little desk in a little office contemplating health insurance.

I run a little shop that’s about as far from CVS-Aetna as you can get in the health care space : a solo practice doctor with four full time employees and revenues a little south of $65 billion dollars.  I shouldn’t feel too alone.  Small businesses account for 99% of US firms and employ almost half of all private sector employees.  But knowing my problem is one shared by many provides only partial solace.

Prior to arrival of the ACA, I provided health insurance to everyone through the company.  At the time I had 3 full time employees and the insurance broker I worked with got me a quote for $1300 / month.  Now, I really didn’t want to be in the providing healthcare business, so when the ACA arrived with its individual market I was happy to facilitate buying health insurance from the exchanges.  So initially, I chose to pay for my employees plans on the individual market.  I was quickly told by my accountant that paying for my employees insurance in this manner was running afoul of a three letter entity of the federal government called the IRS.

Apparently the individual ACA market premiums were allergic to being deducted in this pre-tax manner.   Fine.  So I went ahead and paid each employee $6000 per year extra with the understanding that they would use that money to buy health insurance on the individual market.

Thus, the ACA experiment began with me as willing participant.  Unbeknownst to me one of my employees actually bought a non-ACA plan for her family that was fairly cheap – a few hundred dollars a month for a plan that included her spouse and a child.  Unfortunately, an unplanned pregnancy and complications after the pregnancy that required multiple ER visits and hospital stays meant that the $6000 deductible very much came into play.  Riding to the rescue, of course, was the ACA, which allowed enrollment outside of the enrollment window for life changing circumstances.  Having a baby was one such life changing circumstance.  So into the more expensive, but now worth it, ACA plan the family went.

Everyone was happy until the following year.  Fueled, in part, by Swiss cheese enrollment windows, insurance premiums  meteorically rose.  My nurse fumed about paying $300 per month for a bronze plan $6,000 deductible that he never came close to using.  I promised everyone I would look at trying to buy health insurance through the company again.

And this is why I’m sitting at my little desk in my little office trying to figure out what the best thing to do is.  The former insurance broker is now non-responsive for some reason.  Going online I found some options through Independence Blue Cross and United Health but these still seemed to be fairly expensive.  I reached out to another insurance broker – who promptly showed up at my office with quotes from Independence Blue Cross that were exactly like the ones I had found online!

Me: “Are these the only options?”

Insurance Guy: “The only good ones..”

Me: “United?, Aetna?”

Insurance Guy: “They’re basically the same, but IBC is the best”

Me: “Why?”

Insurance Guy: Unintelligible mumbling

Me: “What about non-ACA plans?”

Insurance guy: “I don’t really sell those.. ”

I asked about non ACA insurance plans because I knew that part of the reason ACA plans were as expensive as they were was because these plans were required to provide a wide variety of minimum essential health benefits that raised the underlying actuarial value of the plan.

An online search brought me plans that were roughly one half of what the ACA plans were asking for with a wide network of coverage, and a similar deductible.  Excellent!  The only problem – there’s a penalty for not having an ACA plan.  The IRS enforcement of this happens by them asking you to check a box when filing your taxes affirming participation in a qualified health insurance plan.  Technically the ACA allows levying a penalty of 2.5% of your yearly adjusted gross income (this is capped at the national average total premium of a bronze plan).   The IRS has not – to date- apparently enforced the penalty, but has recently threatened to do so for those leaving the health care checkbox blank.

Complicating matters even further, the most recent tax bill passed by the House Republicans makes the tax penalty for not having insurance zero, and the Senate Republicans repeal the individual mandate altogether.  The final details are planned to be worked out by Christmas – 10 days after the Obamacare enrollment deadline passes.

I still haven’t decided what to do, but I do find it interesting that as I puzzle over buying or contributing to my office families health insurance, some of my illustrious colleagues have taken to the pages of some even more illustrious journals to bleat about the immorality of the current health/tax policies being passed at this very moment.

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The ‘immorality’ ostensibly refers to the recent tax reform bill that steals health insurance from the 99% to give a tax cut to the 1%.  I scratched my head at the stealing health insurance line, and so should you.  This references doing away with the individual mandate.  Apparently, if you don’t force people to buy health insurance on the exchanges – some people will choose not to buy health insurance.  In all the years I parroted the talking heads about the inhumanity of the 45 million uninsured prior to the ACA, I never stopped to think that many in that group had about as much interest in buying health insurance as my younger child has in eating broccoli.

The problem, I am told, is that not having health insurance with a $6000 deductible is the equivalent of base  jumping with a squirrel suit off a cliff.  Not eating broccoli is apparently slightly less dangerous. To hear the oracles from high castles tell it – the millions that won’t get health insurance because they no longer have to, will die in massive numbers.  It is an interesting position to take because the very same oracles bemoaning the mass graves that will need to be dug to accommodate not having access to health care also bray the loudest about the avalanche of unnecessary health care the populace receives that also necessitates the digging of mass graves.

Are the group of folks that are desperately attached to the ACA with its mandate for expensive plans on the side of all that is good in the world?  Are folks like me that are hoping for the individual mandate to be gone to make it cheaper to provide health insurance to my employees worshipers of Satan?  Is it worth mentioning that many of the physicians supporting transfer of the nation’s wealth to insurance companies are employed by medical centers with much to gain by keeping the status quo?

There is a debate to be had about the best way to provide health care to all Americans.  If you believe the solution to spiraling health care costs is to strengthen the individual mandate – go ahead and make that case.  I’m all ears.  But a word of advice: If someone brings up morality in a debate about health care policy – don’t get outraged, offer to feed them some grass instead.

Anish Koka is a cardiologist based in Philadelphia. His posts appear regularly in THCB.

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