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Explaining Health Insurance and Health Care Reform to Kids
Posted on February 13, 2014 by Helen Jonsen

The Affordable Care Act or “Obamacare” kicked into full gear earlier this year.  With all the often conflicting news coverage surrounding it, even the most up-to-date adults are having a hard time keeping up with developments.  While it’s still too early to determine its success or failure, it’s not too early to explain to your kids how this affects their lives.

 

Here Ballooning Nest Eggs contributor Helen Jonsen explains how to provide simple answers to complicated questions:

 

You might think big concepts such as “affordable health care” and “constitutionality” wouldn’t weigh heavy on little people. But kids are sponges and they absorb all sorts of media headlines—often worrying about what they don’t fully understand. Health care reform has been in the headlines since Congress passed the Affordable Care Act in 2010.  Now that coverage has begun and health care is all over the news again, kids may have more questions or concerns than ever.

 

Being insured means a lot to families. It affects family finances both in planning for insurance and in dealing with an unexpected health crisis. What can you tell kids if they ask what’s the flap about? Or, more importantly, how can you put their enquiring minds at ease?

 

What is health insurance?

Before you get sick, you buy what is called insurance. You pay a company that collects a big pool of money from lots of people to help pay your doctor’s bills for check ups, medical tests and hospital stays. Insurance is a way of preparing for the what-ifs in life: What if you break your arm? What if your sister needs an operation? Since not everyone gets sick at the same time, the pool of money from everyone covers the costs of those who need it without the sick person having to pay the full cost of that bill.

 

Still too complicated? Try this analogy: We’ll call it The First Aid Kit example. You and your friends are going on a hike. Sometimes, when you are in the woods someone gets a cut or a scrape and may need to use a first aid kit. But, you have no idea which one of you will get hurt. Instead of everyone carrying their own stuff, you all chip in a dollar to buy what you need—Band-Aids, first aid cream and bug spray. You now have a box of 100 sticky bandages that each of you chipped in for. Not everyone will need something from the kit but you’ll have it ready for those who do.

 

How is our family insured?

America has two kinds of health insurance: Public, where families who don’t have much money and the elderly are covered; and Private, in which companies or individuals buy insurance coverage. A lot of insurance is part of someone’s job benefits. You pay for it out of your paycheck. It’s the most affordable insurance you can have for your family. Other families buy insurance directly from big companies. This can be very expensive. Because it costs so much money, some people can’t afford insurance and don’t buy it. They hope nothing will go wrong. In that case, if they get sick or hurt they either go into debt, can’t get the help they need or they have to depend on the government for help. That can make the cost of health care more expensive for everyone.

 

What is the Affordable Health Care Act?

On March 23, 2010, the Affordable Care Act became law. The hope was this would help everyone have health insurance. There are a bunch of rules that would make it easier for families and people to pay for insurance so that they wouldn’t have to take a risk and hope they don’t get sick.

 

However, opponents of the Act turned to the United States Supreme Court to challenge its constitutionality.  On June 28, 2012, the federal courts upheld the constitutionality of the law under Congress’s taxation powers.  Of note, the Court determined that states could not be forced to participate in the Medicaid expansion.

 

Phase in of coverage began in January 2014.   Many of the changes will take place over time.  (For a complete timeline of those changes click here at healthcare.gov.)

 

Can everyone get insurance?

Before the Affordable Health Care Act, every state had its own laws allowing insurance companies to decide who could be insured. Here’s an example: Mom or dad were working for a company and used their insurance plan. One of the kids in the family had asthma. But mom lost her job with “Company A” and got a new one at “Company B.” In some states,“Company B’s” insurance might not cover a “pre-existing condition”–meaning a person who was already sick could not get insurance money to pay their bills. So the child with asthma would be left out of the plan. That can cost a family a lot of money because they are already paying for insurance, plus they have to pay for the doctor bills for their child who has to get medicine and extra doctor visits to take care of the asthma.

 

But isn’t that what insurance is for?

Yes, and that’s why under the Affordable Health Care Act insurance companies can no longer do that.

 

How does insurance affect family finances?

Each month, a family needs to pay a certain amount for insurance and set aside money for what else health care might cost that month. They may consider how many kids are in their family or how often they may get sick with strep throat or something else. That will cost money, even though the family has insurance. It may help pay for the doctors and x-rays but mom or dad will have to pay what is called a co-pay right then and there. For an emergency room visit it can be as much as $100. Now, $100 is not much when the x-rays and all may cost as much as $1,000, but it’s still $100. That might mean the family can’t afford to throw a birthday party for one of their children that month or they have to cut back on the groceries they buy.

 

Who has to buy insurance under this new reform?

According to the government’s official web site (health care.gov) “starting in 2014 most individuals who can afford to do so must be enrolled in a health insurance plan. If you don’t enroll, you may be required to pay an assessment. You won’t have to pay an assessment if coverage is unaffordable to you, or for other reasons including religious beliefs.” This is one part that The Supreme Court is thinking about.

 

Why did the Supreme Court get involved?

Under the Affordable Health Care Act, every adult who can take care of his or her self must be insured. It’s called the “individual mandate.” The reason: It goes back to that first-aid kit. If everyone chips in, you have enough money to make sure there are bandages and cream for anyone who gets hurt. If one hiker says he won’t pay but ends up needing bandages, what do you do? If you let him on the hike, does he get a bandage when he gets cut? Is that fair?

 

Well, right now, some people are willing to take that same risk. They don’t buy insurance. But when they wind up in the emergency room, they expect to be cared for anyway. Sometimes they can’t afford to pay the bills. Then, in a sense, we all pay because our insurance rates go higher so there is more money in the pool to cover everyone. Sometimes, our taxes go up to pay for these costs.

 

Still, some states and lawyers believed that according to the Unites States Constitution we cannot be forced to buy services from private companies (like insurance companies). This is a “free country.” And as a country we believe in many individual rights. As citizens, however, there are things we have to do: We must pay taxes to the government on our paychecks, on many of the things we buy, and on much of the property we own.

 

What’s next?

After early website woes last October, enrollment numbers are steadily climbing.  At the end of January, almost 3.3 million people were enrolled in private health insurance under Obamacare.  This reflects a January gain of 800,000 enrollees, or 36%.  Approximately 2.2 million had enrolled during the initial October 1 through December 31 time period.

 

A challenge to Obamacare is to get large numbers of healthy people and young people paying into the system to offset the medical costs of the sick and elderly.  The penalty for skipping coverage this year is just $95 and many healthy people might forego the monthly premiums and pay this nominal fee.

 

Also, since states are not required to expand their Medicaid coverage, twenty-four states have not done so, thus creating a coverage gap where nearly five million people ages 18 to 64 earn too little for subsidies and are ineligible for Medicaid.  This will create added costs for the federal government or/and individual states to subsidy this gap.

 

 

 

Do More:

Big ideas like these playing on your child’s mind may require a don’t-worry hug from mom or dad. But the conversation can open all sorts of doors for on-going learning together.

* What is the Supreme Court? Find out more about the Supreme Court here.

* Why not track this decision—and maybe others—before the Supreme Court? Ask your child how he or she would solve this problem.

* Act out a mock trial with your family over the issues. Just don’t fight over who gets to play the Chief Justice.

* Discuss: Should the government/hospitals be required to cover everyone who comes to an emergency room, even if that person doesn’t have insurance coverage?

* Discuss: Do you think it’s fair for the government to require adults to buy health insurance, even if they don’t think they’ll ever need the insurance?