Ask Stacy: Can I Drop My Health Insurance?

Photo (cc) by tedeytan

Here’s an email I received shortly after the Supreme Court upheld the Affordable Care Act (ACA). You’ve probably seen something similar online or TV, or maybe even wondered about it yourself…

Why should I now not simply cancel my health insurance, and then purchase it when I need it since I can’t be denied? The penalty is so paltry that I save money by doing so, don’t I?
– Ray

It’s a good question. Here’s my response…

I see this possibility mentioned in the media often, Ray. But I don’t understand it.

Let’s consider the provision of health care reform you’re describing – the one that forces insurance companies to take everyone, including those with pre-existing conditions.

First, that doesn’t begin until 2014. Between now and then, the government is likely to create rules to nix that idea, or at least make the choice tougher. They could simply adopt strict open-enrollment periods. For example, they could say that if you don’t sign up for insurance between Oct. 1 and Oct. 31, you’ll have to wait a year – even two – until the next open enrollment. That would radically increase your risk of waiting.

Insurance companies could also presumably have a waiting period. In other words, just because you’re guaranteed coverage doesn’t mean you’re guaranteed coverage within an hour. So if you go to the emergency room for a broken leg, will you sit there in agony, applying for insurance and waiting as long as it takes for your newly purchased insurance to kick in?

Even if there’s no waiting period, what if you’re in a car accident that puts you in a coma? Or have a heart attack while sitting at your desk that renders you unconscious? You’ll be strapped to a stretcher, unable to apply for insurance.

In other words, forget the paltry penalty. What you’re really risking by not having insurance is your entire net worth.

So while you might be able to get away with paying a penalty and waiting until you need insurance to buy it, I doubt that will be an attractive option.

My advice is instead to focus on other aspects of the new law that will begin in 2014, like the state insurance marketplaces that will increase competition and therefore potentially reduce prices. Once these marketplaces are established, you might find the cost of insurance more palatable – and the risk of not having it outweighing the cost.

Ray writes back

After I sent that email to Ray, he wrote back…

Thanks, Stacy. That’s helpful. I’ve seen our health care increase by 53 percent (and that was with being a good health risk) over the past 3½ years, so at this point I’ve seen no reason to smile about Obamacare.
– Ray

And so I replied…

Actually, Ray, I’m in the same boat. My insurance has gone up about the same amount. And while additional coverages, like free preventive care and allowing kids under 26 to remain on their parent’s policies, do cost more, my insurance has been rising at a ridiculous rate since long before the Affordable Care Act. Also keep in mind that when the pool of insureds expands in 2014 thanks to the addition of millions of people, those costs will moderate. Or at least that’s the idea.

On the other side of the coin, here’s a positive from Obamacare that’s already in place: Insurance companies are now required to spend 80 to 85 percent of the money they take in on providing health care to their customers, rather than profits for their shareholders. If they don’t, they have to send rebates to policyholders. One estimate says they’ll be sending out $1.3 billion in rebates this year alone. That sure beats insurance company executives pocketing millions of dollars while they raise my rates. Check out this story: Insurance Outrage: Hike Prices, Pay CEO $100,000,000.

By saying something positive about Obamacare, I’m sure many will think I’m some bleeding-heart liberal who loves big government and hates individual freedoms. Not true. I hate big government, hate paying taxes to keep it alive, and hate any form of government telling me what I can and can’t do.

I do, however, support health care reform. But the reasons are far removed from Washington, D.C. To me this has never been a political issue. I’m a consumer advocate, and health care in this country is a pressing consumer problem. I think we’d all be better off if we turned off the cable news and stopped with the heated rhetoric. This isn’t about Obama or Romney – it’s about you and me.

Consider a few stories I’ve done over the last 20 years:

  • An honest, hard-working woman who got cancer, lost her job, then proceeded to lose everything she’d worked her entire life for. (This isn’t rare: According to some estimates, nearly half of our nation’s bankruptcies are from medical bills.)
  • Another woman who was between jobs, went to the ER with what she thought was a ruptured appendix (it wasn’t), and left a few tests and a few hours later with a $15,000 bill she couldn’t pay. Her bill would have been $5,000 for an insurance company or $4,000 for Medicare. Why did she get charged $15,000 for a bill for services that could have cost $4,000? Because, according to the hospital’s CFO, so many uninsured patients don’t pay their bills, the hospital has to charge exponentially more to those who can.
  • A guy who was laid off, had a heart attack, had surgery, and ended up with a $120,000 bill. When he couldn’t pay it, the hospital sued him and got a judgment on his mobile home. Had Medicare been paying his bill, it would have been less than $50,000.

You don’t have to be a reporter to see the ill effects of our current system – just talk to people around you. I personally know people who would love to be self-employed but have to continue working in a job they hate because they can’t otherwise afford to keep their family safe. I have friends who are self-employed, can’t get coverage at all because of a pre-existing condition, and live in constant fear of getting sick.

This is not the way life is supposed to be, but it’s the way it’s been in the United States for many years now. It isn’t fair, it’s not necessary, and it doesn’t occur in virtually any other First World country on the planet.

Is Obamacare the best and most cost-effective solution for problems like these? I haven’t the slightest idea, and I’m completely open to any form of debate from anyone from any political party about other potential solutions. But I’ve seen with my own eyes what hasn’t worked: the way it was before.

That’s my take. What’s yours? Do you think the Affordable Care Act is an attack on American freedoms, or a step in the right direction? I’d really like to know. Leave your views below, or on our Facebook page.

Got more money questions? Browse lots more Ask Stacy answers here.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
15 Painless Ways You Can Cut Costs in 2021
15 Painless Ways You Can Cut Costs in 2021

Follow these tips to save, so you’ll have money for things that really matter.

9 Purchases That Will Make You More Productive
9 Purchases That Will Make You More Productive

These Amazon products can give you an extra edge at work and other parts of your life.

5 States Where Drivers Pay the Most for Car Insurance
5 States Where Drivers Pay the Most for Car Insurance

Auto insurance will cost you more than three times as much in one state compared with another. Here’s how to lower your rates no matter where you live.

12 Ways Retirees Can Earn Passive Income
12 Ways Retirees Can Earn Passive Income

These simple ways of earning income without a lot of active, ongoing effort can stretch your retirement dollars.

Never Buy These 10 Things on Amazon
Never Buy These 10 Things on Amazon

Just because you can purchase something on Amazon doesn’t mean that you should.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

How to Buy Gas At Costco Without a Membership
How to Buy Gas At Costco Without a Membership

The warehouse club often has some of the cheapest gas in town. Here’s how you can get it as a nonmember.

10 Things to Stop Buying If You Want a Clutter-Free Home
10 Things to Stop Buying If You Want a Clutter-Free Home

If you like to keep things simple, avoid these purchases.

A Simple Way to Silence Robocalls Today
A Simple Way to Silence Robocalls Today

A few steps can keep your phone from ringing when a spammer calls.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

This iconic dinnerware is prized for everyday use as well as reselling for profit.

This Company Makes the Best Tires in America
This Company Makes the Best Tires in America

Driver satisfaction with tires is at an all-time high, but one brand stands out.

7 Home Improvements That Cost a Lot More in 2021
7 Home Improvements That Cost a Lot More in 2021

These projects will take a bigger bite out of your budget than in the recent past.

This Health Issue Can Hint at Dementia Years in Advance
This Health Issue Can Hint at Dementia Years in Advance

One type of pain is especially associated with cognitive decline.

Can I Switch to Spousal Social Security Benefits When My Ex Dies?
Can I Switch to Spousal Social Security Benefits When My Ex Dies?

Knowing when to claim can help you maximize benefits.

Medicare Will Not Cover These 6 Medical Costs
Medicare Will Not Cover These 6 Medical Costs

Don’t let these health care expenses catch you off guard in retirement.

8 Things You Should Always Buy on Amazon
8 Things You Should Always Buy on Amazon

The giant retailer shines when it comes to these things, from basics to hard-to-find specialty goods.

Beware This Hidden Ingredient in Rotisserie Chicken
Beware This Hidden Ingredient in Rotisserie Chicken

Something foul may lurk in those delicious, ready-to-eat birds.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

5 Ways to Fill Your Pantry With Free Food
5 Ways to Fill Your Pantry With Free Food

Anyone can take advantage of these resources.

7 Big Purchases You Should Never Make
7 Big Purchases You Should Never Make

Sometimes a big-ticket purchase is nothing more than a big waste of money.

5 States With the Worst Health Care for Retirees
5 States With the Worst Health Care for Retirees

All of these states are located in the same region of the nation.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

5 Products You Should Never Buy Generic
5 Products You Should Never Buy Generic

Sometimes the brand-name version is clearly superior.

6 Reasons You Should Stop Hiding Cash at Home
6 Reasons You Should Stop Hiding Cash at Home

Stashing money around the house is anything but harmless.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.