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The chances that my house will burn down is very very small. In the 8 years I've lived in it, only one house on my street of 660 houses have had a fire, and it did not totally ruin it.

But the small amount I pay in insurance is well worth it to avoid bankruptcy in the event it burns down and I'm on the hook for my mortgage plus rebuild costs.

The chances that I'll die before my son is old enough to make his own living is likewise miniscule. Yet the life insurance payments are small compared to the peace of mind they give knowing he'll at least not want for money.

The point of catastrophic insurances is not to break even - on the contrary: You should hope it's a loss, because if it's not it means something really bad has happened to you. Maybe the threshold for what constitutes a "really bad" financial blow is high for you, but for most people it is quite low.

You may consider it ok to run the risk of going bankrupt over relatively minor medical issues. I don't.

And your bankruptcy example demonstrates the point of making this mandatory: Otherwise everyone ends up paying, without any ability to steer how the payment burden is distributed. This is likely to further disadvantage those who are least able to pay for their treatments in the first place.

I suspect that despite the shortcomings of ACA it's going to turn out politically much like the UK NHS: When it was introduced, in 1948, the Conservatives fought it tooth and nail, and vowed to repeal it - one might have been forgiven for thinking it would be the End of Britain if one were to have listened to them. A year or two after it was introduced, the NHS had become so popular that they dropped their opposition to it with the realisation that they'd never form a government again if they kept up their opposition.

Chances are good that unless the ACA implementation is botched beyond belief that Republicans will find themselves in a similar situation in a few years, which might just explain why they are so rabid now.

I think its easier to justify insuring objects because in the case of a total loss the objects value can be replaced in full with money.

However when it comes to your health, even billions of dollars will not be able to give you a new live arm if you lost it, or save your life if you have terminal cancer.

So health insurance will always be bounded to a point where you can get injured, and simply just die regardless of insurance.

Life insurance is less tricky, since you're not really insuring your 'life' but rather the income that your family would lose due to your being accidentally dead.

There are more entrepreneurs and potential entrepreneurs that fall into the pre-existing condition bucket than you might think. It's not only people with serious chronic illnesses that would make them unlikely to start a company anyway, but anyone who has an elevated risk due to a major past health event, even someone who hasn't had an issue in 20 years and is perfectly capable of and willing to do a startup. Those people are currently chained to a BigCorp due to the need for group-plan health coverage, and are hopeful that PPACA will change that.

Even among the relatively few people I know interested in doing startups (probably 5?), one is in that category: an early-30s software engineer with a congenital heart defect. He had surgery in his early teens for it, and has not had a major issue since then. It doesn't interfere with his daily life, but obviously there is added monitoring and a significantly elevated risk of future complications, which disqualifies him from non-BigCorp health coverage.

>>> Those people are currently chained to a BigCorp due to the need for group-plan health coverage, and are hopeful that PPACA will change that.

Didn't HIPAA Title I already change that?

http://www.dmhc.ca.gov/dmhc_consumer/hp/hp_hipaacp.aspx If you qualify for a conversion plan, you cannot be denied insurance because of your medical history

https://en.wikipedia.org/wiki/Health_Insurance_Portability_a...

Is there some issue with this I am missing?

>Because of the way co-pays and deductibles work, you have to be in the top 10% or maybe 15% of health care spenders before you even break even with what you've paid in on a Bronze plan (by far the most popular self-purchased plan).

The nature of catastrophic events are that they are rare... and catastrophic. If buying insurance protects me from an event that would have otherwise pushed me into bankruptcy 10 or 15% of the time, that sounds like a pretty okay deal, I mean, depending on how much that insurance costs. But if an event that could bankrupt me did have something like a 1 in 10 chance of happening, and I could insure against it? Yeah, I think I'd look into that.

(Add to this the perception that you get different treatment when you show up to the hospital without insurance.)

Now, I don't know that's how the numbers work out... it sounds like you pulled 10-15% out of total healthcare costs, and I didn't see any reference for that number. just saying, the point of catastrophic injury insurance isn't to 'break even' - the point of that insurance is to not be bankrupt when that catastrophic event happens.

Further, we're talking about entrepreneurs here; a special case of folks who often don't have insurance even when they have income that would normally come with insurance, so the fact that most people are going to go for the super high deductible plan isn't all that relevant to the discussion. My understanding is that the affordable care act would enable me to purchase a full freight health plan, assuming I could pay, without worrying about pre-existing conditions (which have prevented me from doing that in the past.)

I mean, I think contractors, really, more than Entreprenuers are the big winners here. At this point, I've got employees and a group plan, so I'm in okay shape. But, this would have saved me from spending as much time in W2 jobs as I did when I was contracting; Generally, I'd go a year or two as a contractor, then spend a year or so as a W2 to top up my cobra.

The value prop of catastrophic health insurance never fully made sense to me - if I need it, then I am in bad shape, and whether I would have to go bankrupt to pay for it or pay through some insurance is not super important. Seems likely that if all I have is catastrophic coverage, I am going to go bankrupt after the fact anyway because of the long term effects of whatever landed me in that place (those plans do not cover much).

In practice, "catastrophic" here refers to cost, not medical severity.

That's a symptom of another problem, but it's true. A broken knee in a car accident can cost $100k or more, which could be financially devastating for far longer than it takes for a full medical recovery.

I wish it was about catastrophic injury insurance. I'm a single, healthy 33-year-old guy with no kids, so it'd be perfect for me. My annual healthcare expenditures are virtually zero, year after year, right now. Coverage in case of a heart attack or cancer would be awesome, because I can't afford a $100,000+ hospital bill, but otherwise I rarely even have a cold or the flu.

I live in California which, as the first state to comply with ACA, has numbers available for me up at coveredca.com.

The bronze plan requires me to pay a 30% deductible for the category of "High cost and infrequent care". So if I get cancer, my $200k bill (just to start, cancer treatment can go on and on) is still a $60k bill. I'm still bankrupt.

The Silver 87 plan also has a percentage-based deductible. Have to go up to the normal Silver plan to have a flat rate. For my age it'll cost over $200 a month if I make $30k/yr or more.

Also, all the plans, whether bronze silver platinum or anything else, include MANY MANY things other than "catastrophic injury coverage". Everything from prescription medication to preventative care visits.

I really really want a "catastrophic injury only coverage" option but I don't have it. That's what insurance SHOULD be, to cover you in case of significant financial loss. Imagine how expensive car insurance would be if it covered oil changes, or homeowner's insurance would be if it covered minor repairs?

For someone that's lamenting the "disinformation around ACA", I really don't think you've checked the actual costs/plans involved. Well, I have, and let's not pretend that Obamacare offers plain and simple catastrophic coverage because it doesn't. Look at the website and see for yourself. That's California only of course but I doubt the other states will be able to do much better.

> Also, all the plans, whether bronze silver platinum or anything else, include MANY MANY things other than "catastrophic injury coverage". Everything from prescription medication to preventative care visits.

Consider that if a plan is to include many high cost "catastrophic" treatments, excluding prescription medication and preventative visits could easily make no financial sense for the insurers as it opens the door for numerous types of situations where insurance payouts rise drastically because the people insured can't or won't spend the money on drugs or preventative treatments.

It is in other words not at all a given that an insure limited only to catastrophic events would actually turn out to be cheaper to you.

> Imagine how expensive car insurance would be if it covered oil changes, or homeowner's insurance would be if it covered minor repairs?

It would be more expensive, yes, but there is no reason it would increase your total costs unless you were irresponsible in how you treated your car yet lucky enough to escape the consequences.

So if I get cancer, my $200k bill (just to start, cancer treatment can go on and on) is still a $60k bill. I'm still bankrupt.

The plans all have maximum annual out-of-pocket expense caps, above which you get 100% coverage, so it wouldn't be nearly as high as $60k. Checking the website, the out-of-pocket expense for the California Bronze plan is limited to $6,350/yr for an individual, or $12,700/yr for a family. This is precisely so that you can have a finite exposure that can be self-insured by keeping savings in an account.

So in your example, if you were on a family plan and hospitalized, you'd pay the first $5,000 entirely out of pocket (the Bronze-plan deductible). Then you'd pay 30% of the next ~$25,650 in expenses (~$7700), which would bring your out-of-pocket expenses for the year up to $12,700. At that point you've hit your out-of-pocket cap, so if there are still bills past $30,650, the plan would cover the entirety of the remainder.

The Bronze plan is essentially a high-deductible plan, but with the partial-coverage in between zone: you pay everything below $5,000, and nothing above $6,350/$12,700. The minor exception is that you get one deductible-free preventative-care visit per year.

How is that not a blank check to the medical industry ? I mean if this is true, it seems like it'd be trivial for the medical industry to exploit this loophole.

Then the Congress would make another law to fix it with more regulations. And another one to fix that one with even more regulations. That's how the system works. If you don't like it, elect different people to Congress.

> How is that not a blank check to the medical industry ?

For one thing, because 100% coverage for medically-necessary care doesn't mean that everything that the provider would like to get paid for is medically necessary, and insurance companies are very enthusiastic (to say the least) about pursuing and denying and even clawing-back-payments-after-the-fact for unnecessary charges, even when they are only on the hook for some portion less than 100%; with 100% coverage, they are 100% motivated.