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An American Response to Loss of ObamaCare Subsidies

Jane Orient

This summer, the U.S. Supreme Court could, in King v. Burwell, uninsure eight million Americans by finding that subsidies are illegal outside State Exchanges.

Some Republicans are saying “Let it burn.” For Democrats, it’s “ObamaCare or nothing.” Can you detect a difference? How about an American, rather than a partisan response? One that is voluntary and constitutional.

Amid the wreckage left by ObamaCare, one arrangement remains standing, exempt from the individual mandate: the healthcare sharing ministry.

This offers the prospect of a solution to the real problems:

  • Medical care costs too much, and so does medical insurance.
  • The reason medical care costs so much is third-party payment (“comprehensive insurance”).
  • ObamaCare drives costs up still more with its expensive mandates.

Instead of forcing taxpayers, present and unborn, to pay most of the unaffordable premiums, the sharing ministries can drastically reduce costs, while restoring patient control.

The fact is that Americans throw fistfuls of money out the window every month for insurance premiums for care they do not need or want. That money is gone forever. If they develop a problem, the insurer might deny them the care that is best—or, if their policy has lapsed, they might as well have been uninsured the whole time. If they had instead put the money in the bank, they would have it to spend when the need arose.

So should taxpayers throw fistfuls of money out the window for other people’s insurance premiums?

Insurance, after all, is a gamble. You gamble that you’ll have a disaster that the insurer will pay for. The insurance company gambles that you’ll pay premiums month after month and never collect. Like in casinos everywhere, the house always wins in the long run.

It makes sense to risk $1,000 to protect against the very tiny chance of a $1 million loss. It makes no sense to throw away $10,000 per year to prepay for $248 worth of care, the average payout for 50% of healthy Americans. For 95%, insurance pays out less than $10,000 in a year. And family premiums are heading for more than $17,500 in 2015.

The only reason for buying such an expensive product voluntarily is fear of an outrageously high hospital bill. The selfpay patient is routinely billed at the Chargemaster rate, a multiple of what is paid by Medicare, Medicaid, or commercial insurers. Another reason for buying it, not exactly voluntarily, is to avoid ObamaCare penalties.

What if hospitals could not discriminate based on the source of payment? What if self-pay patients were not the equivalent of Untouchables?

People in States without State Exchanges will have a tremendous opportunity if the Supreme Court nixes the subsidies. These are the potential benefits:

  • Many more will be exempt from the individual mandate because of unaffordable unsubsidized premiums.
  • Employers will be relieved of huge penalties that can be incurred if a single worker collects a subsidy.
  • People could exercise a choice for better, more personal care, at a much lower cost.

Health-sharing ministries are a vastly underutilized option—and they work in States with Exchanges too. Some require attendance at a Christian church, but Liberty Health Shares only requires sharing a set of common ethical principles—such as individual responsibility.

For example, one plan now under development would have a monthly family share amount, paid on behalf of a patient or family with a need, of $150 per month. This is lower than the 2016 minimum family penalty for opting out ($2,085/year), and members of such plans are exempted by law from the mandate. The individual share amount of $50 per month is half the $107 per month average cost of subsidized ObamaCare. The nonshared amount is 50 percent of the Bronze ObamaCare deductible. The plan depends on the members negotiating Medicare rates at the hospital. Many hospitals will gladly accept that amount if promptly paid.

Instead of bowing to ObamaCare, States could ensure that health-sharing ministries are not misconstrued to be insurance. They could also expedite the approval of Obama noncompliant low-cost catastrophic insurance. Without the subsidies, their State, including its low-income citizens, would be far better off.