Meet the Health-Law Holdouts: Americans Who Prefer to Go Uninsured - Despite new insurance options under the Affordable Care Act, some still prefer getting care through cash, barter and charity. (Supporters hadn’t imagined what the Congressional Budget Office has since projected: that the largest group of people who will remain uninsured—some 45% of them—will be people who forgo coverage by choice, even though the law guarantees they can get it through a job or on their own.).

From The Wall Street Journal:

The Affordable Care Act has a perplexing problem: Many uninsured Americans prefer their old ways of getting health care.

For millions, arranging treatment through cash, barter and charity is still better than paying for insurance. They include Lisa Khechoom of Glendale, Calif., who refuses to buy coverage. She says she pays a flat $35 for a doctor visit and often substitutes prescriptions with cheaper natural remedies for herself, her husband and their children.

“I’m spending money either way, but it’s going to be less,” says the 41-year-old, who runs a telecom-service business with her husband that brings them an annual income of around $77,000. “For the amount of office visits I do make, why pay $3,500 for insurance when I’m not even taking advantage of it? We go to the doctor and we pay for it. Usually I can get a better deal than if I had insurance.”

The law’s penalty for not carrying insurance grows to its maximum next year and will start at $695 for an individual, up from $325 this year. That isn’t enough to sway Ms. Khechoom, who says paying the penalty is still preferable to buying coverage.

The persistence of holdouts like Ms. Khechoom suggests that the U.S. health-care landscape under the landmark 2010 health law, in many ways, will look like it did before: A large pool of uninsured will use a thriving parallel market for treatment, one partly subsidized by taxpayers and the premiums of people who do buy insurance.

The law’s supporters are trying to figure out how to get these people to embrace insurance. The law’s opponents say the large numbers rejecting its central aim prove it is foundering. Both are waiting to see if the health-care overhaul survives the U.S. Supreme Court, which is expected to rule by month’s end on a case by plaintiffs who argue they shouldn’t have to pay penalties for staying uninsured.

The 2010 law, popularly known as “Obamacare,” was passed on the premise that more than 50 million people in the U.S. needed health coverage but couldn’t get it. It aimed to fix that by requiring big employers to offer health benefits and insurers to sell individual policies to everyone, often with government-funded discounts.

Supporters hadn’t imagined what the Congressional Budget Office has since projected: that the largest group of people who will remain uninsured—some 45% of them—will be people who forgo coverage by choice, even though the law guarantees they can get it through a job or on their own.
The health law’s champions hadn’t counted on universal coverage because the law excludes unauthorized immigrants and can’t do much for poor Americans who don’t enroll in Medicaid, the federal-state program for low-income people, or don’t qualify for it.

Studies put the number who have gained insurance as a result of the law at 16 million to 17 million. About 35 million are still uninsured, according to the CBO, which projects that number will fall to 26 million over the next five years.

But sign-up rates for private coverage under the law are already slowing, and the Obama administration has said the CBO’s forecasts for people buying insurance in the future might be too high.

Can’t fit it in

Among the people behind those slowing numbers is Teasa Lappin of Ravenna, Texas. Ms. Lappin, 54, is an administrator for an insurance agent but is uninsured. There isn’t room in the annual family budget of around $40,000, she says, to cover herself and her husband, who has Medicare and a supplemental plan.

She says she tried earlier this year to keep up payments on a $316-a-month health plan with a $6,000 deductible bought under the health law. After nearly draining her savings to pay for it, she says, she stopped. “I was digging deeper and deeper in a hole.”

“Everything I ever need I pay for in cash,” Ms. Lappin says. She has pared her medical treatment back to a twice-annual blood test, for which she was told she could pay $90, versus the $180 list price an insurer would have been charged.

“I would love to be able to afford it,” she says of insurance. “What I have to do is pray a lot and pay a lot.”

Health-law holdouts are diverse in their income, their health and where they live, surveys show. One commonality: They have often considered insurance and concluded they are still better off using doctors, hospitals and labs who take cash, negotiate prices or write off bills. In some cases, they look to charity clinics, overseas travel and prescription-drug-giveaway programs.

They “know what they’re doing,” says Mike Perry, a pollster who recently completed a study, “Understanding the Uninsured Now,” for the Robert Wood Johnson Foundation, which supports the health law, and the GMMB communications firm, which works with the foundation.

“They’ve been to the site,” he says of HealthCare.gov, “they’ve done the math” and have figured that the cost of insurance and deductibles, weighed against discounts on premiums and fines for going uninsured, comes out in favor of going it alone.

Most uninsured “feel they can still get care without insurance, and pay for it,” Mr. Perry says. More than half his respondents said they had had prescriptions, doctors’ visits, checkups, emergency care or preventive tests and screenings since being uninsured—and said they were confident they could continue to do so.

Holdouts are a challenge to the Affordable Care Act because its goal was to improve the U.S. system of insurance-based care by guaranteeing more people bought into it. The law’s insurance changes stand to work better if more people participate—especially younger, healthier ones.

The law’s ability to revamp the health-delivery system is also affected by the flourishing parallel system that serves the uninsured. Doctors’ offices typically have price lists for cash-paying patients, and the uninsured who use them say they’re often surprisingly reasonable. Hospitals that charge high prices to the uninsured at times are willing to haggle them down, figuring it is easier to take in whatever money they can.

Some who opt out of insurance inevitably pass the costs on, as they always have. Federal law requires emergency rooms to offer lifesaving treatment, regardless of a patient’s ability to pay, and hospitals typically operate formal charity programs for other urgent needs. So when some of the uninsureds’ bills go unmet, they are footed by a combination of taxes and higher prices passed along to patients with insurance.

People like Ms. Khechoom say they are paying their own way, making responsible choices for themselves and their families. Her provider is happy to take cash for the $35 primary-care visit, she says. Getting her finger stitched when she cut it in the kitchen came to $100. If she had to, Ms. Khechoom says she would pay cash for a hospital visit.

Some actively like going it alone. Bob McConnell, 60, of Fort Mill, S.C., describes himself as an investor who is generally well off. Married and with two children, he says he saves money by haggling directly with doctors and labs over fees. He also objects to the law on philosophical grounds, seeing it as an intrusion on his privacy.

“Effectively, I am self-insuring,” he says. At his local pharmacy, he uses coupons he couldn’t apply if he had a plan through the Affordable Care Act, he says. “It costs less than the pharmacy benefit plan I was covered under as the copays were steep and I had to pay full retail without coupons for a couple essential name-brand products.”

Many people Mr. Perry’s firm surveyed said they valued the financial security of having health insurance, but not as much as repaying debts, building savings or repairing homes or cars.

Kim Hess, 51, says she can’t squeeze money for a health premium out of her budget. Ms. Hess, of Concord Township, Ohio, works two part-time jobs as a nurse, making about $27,000 a year, she says, and her husband has an income of $21,000. One bad illness would wipe out the family financially in any case, she says. “Having health care is not going to save my house.”

She has bulging discs that have all but crippled her in one leg, she says. She turned to the emergency room when her pain became excruciating and used her contact network to find a doctor willing to take cash to order her an MRI and write her prescriptions.

“If I wasn’t a nurse, I would be lost,” she says. “Uninsured people really have to be savvy.”

‘Respect the choice’

Indeed, going it alone isn’t easy. Many of the uninsured still say they don’t feel all their health needs are being met by their efforts to cobble together care. And negotiating is stressful. Some have been stung by big bills that took years to pay, although that could happen when they had insurance, too.

Some of the health law’s boosters have concluded they have to recognize the tough straits people are in. “We do have to respect the choice,” Alison Betty, a GMMB partner, told a recent conference of enrollment activists.

About 6.7 million people had paid-up health plans through the law’s online exchanges by the end of 2014, the Obama administration says. Around 11 million more signed up for Medicaid.

There are currently 10.2 million enrollees with private coverage for 2015, officials announced this month. That is on track with the administration’s target, which Health and Human Services Secretary Sylvia Mathews Burwell revised downward last fall from a CBO projection that 13 million would use the exchanges this year. “We are in the middle of doing our analysis for our next open enrollment,” Ms. Burwell told The Wall Street Journal. “It is an evolving picture.”

Some state officials say those numbers reflect the most enthusiastic people to sign up, and that they don’t expect them to grow much more. “All exchanges got the low-hanging fruit in that first year,” says Pat Kelly, who heads the online exchange for Idaho, one of 13 states that fully operate their own portals for consumers to shop for insurance plans and sort out subsidies.

Mr. Kelly says that, like a business, he is looking to shift “from an acquisition mode to a retention mode.”

All this leaves medical providers in a bind. Some health systems are paring back their programs for the uninsured. Detroit’s Henry Ford Health System now restricts eligibility for its charity care programs—asking people to check first if they can get coverage on their own, but agreeing to cover urgent needs if they missed a sign-up deadline.

“One of the decisions that we did make was that we really wanted people to sign up,” says Nancy Schlichting, the system’s chief executive officer. “If we continued to offer exactly the same program that we had in the past, people would decide, well, why should I sign up?”

Other programs keep offering the same services to the uninsured—and find they need to expand. The Healing Hands Health Center in Bristol, Tenn., which has provided charity care exclusively to the working uninsured for 18 years, has just bought a bigger building. Patients make a $10 donation for a doctor visit and $20 for the dentist, and can do gardening or window washing instead of paying.

The clinic staff recently diagnosed diabetic ulcers for Phillip Hurd, 48, a home-health aide, and helped him persuade the local hospital to operate and write off the cost. The clinic encouraged Mr. Hurd to review insurance options on HealthCare.gov. He did. After weighing the cost, he says, he concluded he was better off staying at Healing Hands and paying the penalty under the health-care law if he had to.

Sarah Phillips, the center’s development director, says she is almost halfway to raising $4 million for a new endowment to keep the center going for years to come.

“I’d rather you have insurance. As a taxpayer, if I’m paying taxes for this Affordable Care Act, I want you to take it,” she says, but “we need to keep doing what we’re doing….What if we weren’t here?”