Health Care Reform: Good for People Like Me
A long time ago, I had an idea. I was working a regular job, but I realized that what I wanted to do was be a writer. I figured that I could make some money writing, but not necessarily enough to support myself. So, I came up with a naive plan. It started with living more frugally.
I did all the ordinary frugal stuff. I ate out less. I bought fewer gadgets. I moved into a cheap apartment. I drove less.
Living more frugally did two things. First, it narrowed the gap between what I figured I could earn as a writer and what I was spending. Second, it freed up cash for saving and investing — and investing let me fill the gap from the other side, augmenting my potential writing income with interest and dividends.
You'll have already seen why I call it a naive plan. When I first started, I figured all I had to do was build my investments to the point where my investment income filled the gap between my writing income and my spending. But in the United States, that didn't work — because of health insurance.
Now, I was prepared to include the cost of health insurance in my plan, just like I was willing to include rent, groceries, and my internet connection. But there's no way to budget for the cost of health insurance: it's cheap enough if you're healthy, but spikes up toward infinity if you get sick. Worse, there's every reason to worry that getting sick will prompt your insurance company to go over your medical history with a fine-tooth comb, and then use any omission or error in your insurance application as an excuse to rescind your policy.
The upshot, as I wrote a while back in an article called Not Free to Be Poor, was that health insurance in the U.S. wasn't really insurance at all. That is, it didn't protect your finances from the huge contingent expenses that would hit if you got sick.
Health care reform is fixing that. The first big change is that in just six months, insurance companies can no longer rescind policies just because you made some mistake on your application.
To people like me, that's a really important part. Right now (for the next six months) my whole financial future is riding on a bet: I'm betting that I'll only get seriously ill or badly injured one time in my whole life. Since I'm healthy, I've been able to get a good health insurance policy. And, since I'm healthy, and could get a good policy from a different insurance company, I'm in a position to shop around for a better rate. But getting sick would mean losing the bet. I wouldn't be able to get a new policy, so I'd be stuck with the old policy — which would immediately start getting more expensive, a process that would accelerate as healthy people shopped around and found cheaper policies to switch to, leaving only sick people behind, paying ever higher premiums.
There'll be future good things, too. In four years insurance companies won't be able to deny coverage just because you're sick. The health insurance exchanges will make it a lot easier to shop around for a policy. People who are really poor (earning less than 133% of the poverty level) will get free insurance through Medicaid, and people who are a bit less poor (up to 400% of the poverty level) will get a subsidy for the cost of their insurance.
So, health care reform is good for people like me. And there are a lot of us:
- How many potential entrepreneurs would be willing to take the risk of starting a small business, but not the risk of going without insurance?
- How many workers at big companies would be happier at a small company, but have a sick spouse or sick child and need the big company's insurance plan?
- How many creative types (writers, artists, musicians, actors, dancers, filmmakers) would be willing to eke out a meager existence on what they can earn from their art, but aren't willing to bet their entire financial future that they won't get sick?
- How many people just want to try something different, but have been sticking to their old job because it's got good insurance?
I look forward to the unleashing of all that talent and energy, once all the people like me are able to do what they're called to do, without worrying that one serious illness would bankrupt them. I think there's a lot of us.
I think we'll do great things.