Health Care: Cheaper to Opt Out?

Financial implications of the Affordable Care Act

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    NEWSLETTERS

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    People for and against the administration's health care act protested in front of the U.S. Supreme Court.

    About 7 million currently uninsured Californians must soon buy health insurance or pay a penalty as a result of the U.S. Supreme Court’s ruling on Thursday.

    Among the provisions the court ruled constitutional was the individual mandate, lauded by supporters as a way to extend health insurance to all Americans, but criticized by others as being an overextension of force by the federal government.

    Beginning Jan. 1, 2014, Americans must purchase health insurance or pay a penalty, estimated to be anywhere from about $95 per individual to $285 per family or one percent of their annual income, whatever is greater.

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    The penalty will be paid to the government in the same way federal income taxes are collected by the IRS, the Court’s opinion read.

    But with the average cost to insure a family of four topping over $20,000 a year, paying a $285 penalty plus any out-of-pocket costs for a doctor’s visit here and there may be more appealing for families making every dollar count.

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    Stephen Green, president of the California Academy of Family Physicians and legal expert Dan Eaton share insight in the hours after the Supreme Court ruled on the Affordable Care Act.

    It’s likely that many people will opt out for this reason, said Robert Seidman, associate professor in San Diego State University's Graduate School of Public Health and head of its division of Health Management and Policy.

    "It begs the question: is the penalty enough to induce people to buy insurance? It’s so low that people might pay the penalty instead of insurance. From a financial perspective, you might actually save money by paying the penalty, just as long as you don't get really sick," Seidman said.

    But if those uninsured patients do become ill and can't afford their treatment, their expenses may fall on the insured. Down the line, these expenses may mean higher premiums. This could have the same adverse effects the Obama administration was trying to avoid in creating the policy, Seidman added.

    “You’ll have people waiting until their problem is extreme, going to the emergency rooms, tying the [emergency rooms] up, and ending up costing everyone more money anyway because the problems are delayed when they’re finally attended to,” said Stephen Green, president of the California Academy of Family Physicians.

    Not purchasing insurance, despite the potential savings, isn't ultimately worthwhile, he said.

    “Besides it not being good for those patients, it’s still very costly for all of us.”

     

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