ObamaCare Discriminates against People without Bank Accounts

May 29, 2013 - National Center for Policy Analysis (NCPA)

The Affordable Care Act (ACA) (" ObamaCare") was passed in March 2010. The ACA creates a universal health care system and requires every American to have health insurance. Most health plans accept a credit card for the first month's premium payment and then require customers to pay monthly with a check or an electronic funds transfer from a checking account. This poses a major problem for insurance companies because a large percentage of Americans do not have a traditional checking or savings account, says Kaiser Health News.

• One in five households in the United States, or about 51 million adults, have only a tenuous relationship with a traditional bank.
• Many instead rely on check-cashing stores and money lenders, according to the Federal Deposit Insurance Corporation.

There is no federal law that requires health insurers to accept all forms of payment, including credit cards or the cash-loaded, pre-paid debit cards that people without bank accounts often rely on.

• Federal health officials issued a letter in April stating that all health plans selling coverage in the federally-run insurance marketplaces in 28 states will have to accept payments in ways that do not discriminate against their customers, but did not prescribe what those payments should be.
• Insurance carriers are in a problematic situation since the transaction fees for credit cards and pre-paid debit cards can run as high as 4 percent. If only one company takes the plunge, its costs are likely to be higher, scaring away customers.
• Massachusetts, several years ahead of the rest of the country on health insurance reform, prohibited credit cards because the fees were too high, says Jon Kingsdale, former executive director of the Massachusetts Health Connector.
• Consumer advocates who want moderate-income families to have easy payment options are themselves wary of credit card late fees and high-interest charges for those who can't pay off their monthly balance.

The consequences could be severe. When a citizen's insurance is canceled, starting next year, they will be breaking federal law and liable for any medical bills. So far, Congress has not provided any solutions to the problem, but if they don't find one by January a lot people could be breaking the law without a good solution.

Source: Sarah Varney, "How Will The 'Unbanked' Buy Insurance On The Exchanges?" Kaiser Health News, May 20, 2013.