Without Obamacare Penalty, Many Planning To Drop Health Plans
Around 4 million may quit this year, leaving them vulnerable to medical emergencies and raising rates for all
Dana Farrell’s car insurance is due. So is her homeowner’s insurance — plus her property taxes. It’s also time to re-up her health coverage. But that’s where Farrell, a 54-year-old former social worker, is drawing the line.
“I’ve been retired two years and my savings is gone. I’m at my wit’s end,” said the Riverside County resident from Murrieta. So Farrell plans — reluctantly — to drop her health coverage next year because the Affordable Care Act tax penalty for not having insurance is going away.
That penalty — which can reach thousands of dollars annually — was a key reason that Farrell, who considers herself healthy, kept her coverage. Now, “why do it?” she wonders. “I don’t have any major health issues and I’ve got a lot of bills that just popped up. I can’t afford to pay it anymore.”
Farrell is among millions of people likely to dump their health insurance because of a provision in last year’s Republican tax bill that repeals the Obamacare tax penalty, starting in 2019, by zeroing out the fines.
The Congressional Budget Office estimated that the repeal of the penalty would move 4 million people to drop their health insurance next year — or not buy it in the first place — and 13 million in 2027.
Some people who from the start hated the Affordable Care Act, or Obamacare, as it is often called, will drop their coverage as a political statement. For people such as Farrell, it’s simply an issue of affordability.
Since Farrell started buying her own insurance through the open market in 2016, her monthly premium has swelled by about $200, she says, and she bears the entire cost of her premium because she doesn’t qualify for federal ACA tax credits. Next year, she says, her premium would have jumped to about $600 a month.
Instead, she plans to pay cash for her doctor visits at about $80 a pop, and for any medications she might use — all the while praying that she doesn’t get into a car accident or have a medical emergency.
“It’s a situation that a lot of people find themselves in,” said Miranda Dietz, lead author of a new study that projects how ending the penalty will affect California.