An email from someone who isn't planning to buy insurance under the new exchanges:
I'm a 32-year-old, male, married IT consultant in Nevada with a child. My wife and son have insurance through her work. I am presently uninsured and will remain so for the foreseeable future. Why? Well, I work for a small business with limited ability to contribute for health insurance (50% at the moment, though that might decrease) and several of my coworkers have health issues - consequently, to get insured, it would run me $250/month today for a "catastrophic" plan and premiums are expected to go up next year. On top of that, the insurance coverage is too weak for it to do any good - the difference between covering 80% of a $1 million hospital stay and none of it is financially identical for me - I don't have $200,000 lying around, much less $1 million, so we'd have to file for bankruptcy either way - and even if the hospital was willing to let me pay it off for 30 years, why would I want to if I can make it "go away" or get reduced substantially in bankruptcy court? Since doctors here are increasingly comfortable accepting cash payments, I don't even get the purchasing power available from having insurance - it's about the same anyway.
So, to recap, my options are to pay $250 a month (and rising) to pay for an insurance package that won't cover what I need covered anyway, or just pay the IRS and put the difference in savings and loan repayment (I have student loans, but nothing headline-worthy).
If I'm missing something, feel free to fill me in - I'm open to suggestion.
This letter feels like a cross between testimony, and my "Ask the Blogger" personal finance column, so that's how I'm going to treat it.
To start with, I feel your pain. I was uninsured for several years in my late 20s and early 30s because New York's insurance regulations (guaranteed issue, community rating, and so forth) meant that the absolutely cheapest policy available was $450 a month. It might as well have been a million. I could have afforded the catastrophic policy I'd been using in Chicago, but that was illegal in New York.
The good news is that your insurance is going to change next year. The bad news is that it's changing because in the small group market, high-deductible plans are becoming illegal. As of next year, your employer will be forced to offer you a plan that caps your annual expenditures at a low level.
The bad news is that this probably means the cost of your insurance is going up, not down. And you will not be able to go onto the exchanges and buy subsidized insurance unless your employer drops coverage entirely.
Should you buy it? I can't look into your household budget and see. But my general advice to anyone—and especially parents—is that you need three kinds of insurance: long-term disability insurance, life insurance, and health insurance. None of these will necessarily make you healthier, but they will protect your assets and make sure that you and your wife and child don't end up trying to live on an $800-a-month SSDI check.
In fact, I'd recommend that right now, you go out and look for a catastrophic plan on your own: a good one with a high deductible, but 100 percent coverage after you hit that deductible. You should be able to get that for a lot less than $250 at your age, provided you're basically healthy. Like, a fraction of that.
Come next year, unfortunately, you won't be able to get one of those plans. But you should try to fit insurance into your budget if you possibly can.
Excited about how Obamacare will help your family? Worried about it? Do you do personal finance work with the uninsured and have thoughts on how this will affect them? Are you confused about how this will affect you? Write me at email@example.com and I'll run letters and answer questions as best I can.