Should I maintain a separation of Health and State?
October 25, 2013 3:25 PM   Subscribe

I will need new health insurance as my insurance company is dropping individual policyholders in my state ahead of the new Affordable Care Act. I do not qualify for any subsidies under the new law and have no reason to think that will change. A friend suggested that I avoid buying insurance through our state exchange and buy straight from an insurance company to keep the IRS and government out of my health business. Is this a valid argument?
posted by cecic to Law & Government (18 answers total)
First of all: No matter what, you're going to have to prove to the government that you have health insurance or you'll be fined.

Second: I'm unclear what, exactly, you (or your friend) are concerned about. Nothing about going through the Exchange means that the IRS or any other part of the government is involved in your actual getting of health care - the government's determining what plans are allowed to be offered, but it's not like anyone at the IRS is going to be pawing through your health records just because you bought through an exchange. All the exchange does, other than determining eligibility for subsidies, is 'match' you with a private company who you will buy your insurance from and with whom you will conduct all transactions as a health consumer. The government is playing matchmaker, but not middleman, as it were.

If you can clarify exactly what concerns you have on privacy, etc, maybe I or others can reply in more depth, but I'm genuinely unclear on what specific problems or privacy violations you expect to avoid by shunning the exchange.
posted by Tomorrowful at 3:32 PM on October 25, 2013 [16 favorites]

Obviously this will vary by state but from what I understand most of the exchange sites are just front-ends and clearinghouses for information the way or whatever is, then when you sign up it just tells Blue Cross or whoever "Sign up cecic to BCBS Silver please!"
posted by Ghostride The Whip at 3:32 PM on October 25, 2013 [1 favorite]

I would not make do with worse health coverage to make a point about politics, no matter which direction my politics lay. Politics will matter very little to you if you get sick. Get the best you can afford, wherever it's from. Which includes if that's not an exchange; if you're not reliant on the subsidies, shopping around is a Very Good Thing. Recent events seem to establish well that if the government really wants your colonoscopy results, they'll get them, but in practical terms, do you really think they care? If you believe that the ACA is a bad thing, I disagree (as someone who NEEDS that subsidy) but I think you're entitled to the opinion, I'd just express it with letters to my elected representatives rather than making do with less than the best I could afford.

The IRS only cares to the extent that you can document whatever you need to document for your tax return. But they've been involved in public health to that extent for a long time--many medical expenses are deductible above a certain percentage of income if you itemize--so that's not new.
posted by Sequence at 3:38 PM on October 25, 2013 [5 favorites]

If it is a privacy issue you could not do worse with an insurance company. They have shared information with one another for years and that is partly why the government has gotten involved. I am much more afraid of the the insurance industry than I am of the IRS.
posted by cairnoflore at 3:43 PM on October 25, 2013 [28 favorites]

The government is not going to be involved in your health business if you buy through the exchange. The governments role is this: verifying you have a policy (because the law requires you to), verifying your income to match you with any possible subsidies (the IRS part) and facilitating your ability to shop through the exchange. That's it. The government will not tell your doctor what treatments you can and can't get, it will not want to see your health records, it will not be involved in your care at all.

The amount of misinformation about the ACA has been frustrating; many people have little idea what the law does due to the constant din of "death panels" and government running medical care (neither of which is true, BTW.) If you have questions, you can track down a "Navigator" who can walk you through everything. This is a pretty simple equation when you're not eligible for subsidies - shop around and see if you can get a better deal through the exchange or through your own agent.
posted by azpenguin at 3:55 PM on October 25, 2013 [13 favorites]

As others have said, this is not a valid argument.

That said, there are reasons to go directly to an insurance company rather than purchasing through an exchange. These reasons have zero to do with the government getting involved; they're about price and nature of coverage. You should talk to an insurance broker to see if any of these apply to you, and you should do it very soon because certain programs will no longer be available after Dec. 1st.

But yeah, the idea that if you use government software to buy your insurance Uncle Sam will be doing your pap smears is just so much tripe and nonsense.
posted by Capri at 4:07 PM on October 25, 2013 [2 favorites]

It is not a valid argument. HIPPA still applies weather or not you get insurance through the exchange or do all the leg work yourself. In both cases ''the government'' has the same access to your ''health business'' I.e. generally very little unless it is pertaining to a specific issue as outlined in HIPPA
posted by edgeways at 4:10 PM on October 25, 2013 [1 favorite]

Also most companies which offer plans on the exchanges aren't going to give you a different individual plan, they're going to point you at the plans on the exchanges.
posted by Justinian at 4:25 PM on October 25, 2013

In my state, the plans I found suitable were offered both on and off the exchange. Insurance companies here do not direct you to the exchange unless you might qualify for a subsidy (and the three sites I checked all had a little calculator for that purpose, with a link to our state's exchange).

They were roughly the same price (i.e., a difference of $5), and since I was not eligible for a subsidy, I did not bother with the exchange. I figured there was no reason to add another layer to the whole process when I could just print the forms from the insurance company's web site.

Also, I like the paper forms. When the form asks for my Social Security Number, I just write in "Please assign an ID number."

If the NSA wants to know when I had my tetanus shot, they will have to work a bit more for that information. ;)
posted by AllieTessKipp at 4:33 PM on October 25, 2013

No matter what, you're going to have to prove to the government that you have health insurance or you'll be fined.

Not exactly. It turns out that the ACA sets up a fine. It also prevents the IRS from doing anything to collect that fine if you don't pay it. The only thing they can do is hold back part of your tax refund, if you have one. If you set things up so you don't have a refund, they can't do a damned thing to you. And refusing to pay it isn't a crime. That section of the ACA is one of many very strange ones.

A congressional committee wrote this summary:
The penalty applies to any period the individual does not maintain minimum essential coverage and is determined monthly. The penalty is assessed through the Code and accounted for as an additional amount of Federal tax owed. However, it is not subject to the enforcement provisions of subtitle F of the Code. The use of liens and seizures otherwise authorized for collection of taxes does not apply to the collection of this penalty. Non-compliance with the personal responsibility requirement to have health coverage is not subject to criminal or civil penalties under the Code and interest does not accrue for failure to pay such assessments in a timely manner.
Of course, the law could be changed, and your decision to kiss it off is your responsibility.
posted by Chocolate Pickle at 5:04 PM on October 25, 2013 [2 favorites]

Yeah, the privacy and control-of-health-care-decisions issues have nothing whatsoever to do with the mechanism by which you purchase the insurance. The only reason to avoid the exchanges is if they're a hassle to use, and that varies by jurisdiction (I wouldn't tell my worst enemy to try to use the federal site right now, but many of the state sites are working at an OK-or-better level.) Personally, I'd want to comparison shop pretty aggressively, for many reasons.

Also, your insurance company may offer to automatically move you to an approximately-equivalent plan that counts as "qualifying" under the ACA. They should say something about that in the notice they send. It may not be the best for you in terms of pricing, etc., but it's possible you won't have to do anything.

The "government in your health decisions" argument, other than the "Obamacare = evil" bit, largely boils down to something like "the long term impact of the regulations in question on what will be considered appropriate, and the ACA is quite explicit about what insurance must cover so you're screwed over financially as you might be forced into paying for services you disagree with or don't want/need." Reasonable people can agree or disagree on lots of philosophical stuff in this arena, but none of it really has to do with the exchanges themselves. I'm all about taking principled stands, but this isn't exactly where I'd be making mine if I planned to take such a stand with my money and this law.
posted by SMPA at 5:27 PM on October 25, 2013

I buy my own health insurance directly from the insurer so you can definite do it. Just know it can be quite expensive for an individual. If you can get comparable coverage for less thru the exchange then I'd do so.
posted by wildflower at 7:21 PM on October 25, 2013

Have you actually been dumped?
posted by Ironmouth at 8:17 PM on October 25, 2013

Response by poster: Have you actually been dumped?

Yes. Effective 1/1/14. Aetna is leaving the individual policy market in CA.
posted by cecic at 8:27 PM on October 25, 2013

Aetna had very few individual policyholders in the state to start with, basically, and I'm guessing they couldn't get enough to make new compliance stuff profitable. That's happening a few places--in a sense it's because of the ACA, but also in a sense it's just a matter of pulling out when one's market share dwindles to the point of uselessness. Sounds like there's about a dozen other options in CA, so at the very least the exchange should give you a starting point to compare with. Overall, in my state, even without the subsidy, the estimate is less than I used to pay yearly, for coverage that is just as good; that's probably going to vary a fair amount depending on what kind of deal you were getting before.
posted by Sequence at 7:45 AM on October 26, 2013

Response by poster: Are you sure you don't qualify for any subsidies? They apply for many people who are not low income, so worth looking into.

Yes. I started the application process (haven't finished) but am past the part where it tells me I don't qualify for any tax subsidies. The limit is not very high for a single person.
posted by cecic at 12:47 PM on October 26, 2013

As others have said, I'm really not clear on how you think this "keeps the government out of my health business". The fines apply whether or not you go through the exchange, and there isn't really any more involvement if you do go through the exchange -- it's just a way to pick a plan, at the most basic level, although the types of plans offered through the exchange are regulated to ensure certain minimal levels of coverage (e.g. the bronze, silver, gold stuff, which isn't rhetorical).

That section of the ACA is one of many very strange ones.

It is my understanding that this was written in order to ensure that the fines did not meet the definition of a tax, for various reasons, including the necessity to reconcile any revenue surplus or shortfall with the current law, to be revenue neutral, and the (in a sense proven) need to withstand a Supreme Court challenge -- on top of any political "no new taxes" considerations.

It also prevents the IRS from doing anything to collect that fine if you don't pay it. The only thing they can do is hold back part of your tax refund, if you have one. If you set things up so you don't have a refund, they can't do a damned thing to you.

This may be factually true, but it's sort of amusing in that it rarely makes sense for people to get a refund in the first place -- that's basically money you loaned to the feds for the duration. It is, however, a smart way to ensure you won't have a severe level of tax owed when you file, which can cost you if you can't pay it right away. It will be an interesting thing if people start doing this, as it would close one particular spigot of cash that the Treasury has been depending on over the decades. But based on past behavior I doubt that more than a few will.
posted by dhartung at 2:15 PM on October 26, 2013

It is my understanding that this was written in order to ensure that the fines did not meet the definition of a tax ...

To the contrary, the Supreme Court approved the ACA insurance mandate precisely on the basis of Congress' taxing power. The Supreme Court declared the penalty fee to be a tax.

The IRS may not be able to file a lien to collect, but that doesn't mean the tax just goes away. The IRS can collect money owed for up to 10 years after each return is filed. They can also take the tax out of your payroll withholding payments from your employer or quarterly estimated tax payments.
posted by JackFlash at 11:29 PM on October 26, 2013

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