Is health insurance worth the price?

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Millions of Americans are willing to buy health insurance — but only if it is available at steep discounts.

That somewhat surprising conclusion is suggested by two recent Department of Health and Human Services (HHS) reports, including one released last week analyzing average premiums paid by the 4.7 million people who have obtained subsidized coverage through federal health exchanges.

That study found that people who qualified for health insurance subsidies paid an average of $82 a month for coverage, with nearly half paying $50 per month or less. On average, subsidies covered 76 percent of the premiums, a great deal for those who are getting government help.

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Absent that help, most consumers apparently didn't think health insurance was worth the price. An HHS report from last month found that three out of four people who completed applications chose not to select a health plan once they learned that they would have to pay the full premium. According to that study, nearly 4.8 million people who went through the rather laborious application process were told that they did not qualify for subsidies. Of those, just over 1.2 million selected a health plan. For the rest, paying full price for coverage was not an appealing option.

Premiums for plans sold through the exchanges aren't terribly high. A 35-year-old single person could buy silver-level coverage for an average of just $260 per month even without subsidies, according to HHS. Individuals who earn less than $46,075 are eligible for subsidies. That means that those who don't qualify for assistance have monthly income of at least $3,840. The average silver plan would cost less than 7 percent of their earnings. But even this price proved to be more than millions of applicants were willing to pay.

Policymakers have long assumed that there is a great pent-up demand for health insurance. Few people, it has been argued, were uninsured by choice. They were either too poor to afford coverage or had medical conditions that rendered them uninsurable.

Implementation of the new health care law addressed those concerns, however imperfectly. Although the availability of Medicaid varies by state, the non-Medicaid population in every state has a relatively robust set of coverage choices at moderate prices. Yet only about 1.2 million people, an unknown number of whom were previously uninsured, opted to pay those prices without government aid.

No product in human history has been so aggressively marketed through so many channels, ranging from door-to-door solicitations to social media outreach. And while criticism of the program has been ferocious and at times distorted and unfair, 13.5 million people ignored the noise and applied for coverage. They found out for themselves what was available and what it would cost. The vast majority of those whose earnings rendered them ineligible for government subsidies decided they didn't want it.

This may not be a permanent state of affairs. Many of those who opted against buying insurance will find their federal tax refunds reduced next year, as they are compelled to pay the new tax on the uninsured. They will learn that the government isn't asking them to buy health insurance; it is ordering them to do so. Perhaps the credible threat of even stiffer future penalties will bring them to heel.

For now, at least, it appears that millions don't want health insurance if they have to pay the full price, raising the question of whether government should penalize consumers for not buying a product they don't want and don't think they need.

Badger was formerly deputy assistant to the president for legislative affairs, where he helped formulate the George W. Bush administration's policy and legislative strategy.