Or at least two of them.
Cost and need.
First, consider cost:
For 2014, the penalty is either $95 per adult or 1% of family income, whichever results in a larger fine. (Income is defined as total income above the filing threshold, which is $10,000 for an individual and $20,000 for a family in 2013.) That’s still a lot less than premiums, which are generally $200 to $300 a month on average for a silver plan.
So a person making $50,000 would not be eligible for a subsidy and would pay full price — typically around $2,400 to $3,600 a year in premiums — for a plan. If he declined to get insurance, he would only be subject to a $400 penalty for the year.
A couple earning that amount would receive a roughly $1,300 subsidy, leaving them to pay about $4,750 in premiums for the year. But that compares to a $300 penalty.
For some folks, the economics just doesn’t make sense. The penalty is the better way out.
Then there is the case of the need. Young people generally don’t need the insurance. Why? Because they aren’t sick:
For some folks, health insurance just isn’t a good deal. Take Jessica Birge, 29, who is studying nursing and works as a medical assistant. Her job gives her $100 a month for medical expenses, though she does have dental and vision coverage through her employer. But she doesn’t have a lot of medical expenses since she rarely goes to the doctor, opting instead to go to a local clinic for her annual exams.
Though she knows she needs insurance in case she gets into an accident, she doesn’t think Obamacare is very affordable.
“I don’t really want to pay a penalty, but it’s more economical for me to pay $300 a year [in fines] than $200 to $300 a month for insurance I don’t use,” said Birge.
Now, you can argue that the young folks should contribute to the system in order that the elderly and the sick may obtain coverage. And I would argue that such a ideal is a noble one indeed. But we’ve now moved away from an insurance conversation to one more properly defined as an entitlement conversation.
The fact is, Ms. Birge and millions like her are simply making the choice to self insure. A choice that I myself made when I was that age as well. Lookig back I wish that I had taken a catastrophe policy and matched it with an HSA. Not that ever was sick or hurt, but it’s a curse of being older to look back on the mistakes of youth and shake your head.
Plus I would now have an HSA account that would have grown tax free over the last 22 years.