Do Americans have to buy American insurance or can we buy Canadian insurance where it is cheaper? (hypothetical on the cheaper part) Or is Obama extorting money from us so he can fund his special interest groups?
Thrifty in Kansas
Dear Thrifty in Kansas,
The answer to your question is that you could buy any health insurance that meets the minimum standards set by the health reform law. If the Canadian plan met the requirements – such as covering essential health benefits, having no lifetime benefit limit, imposing no co-pay on preventive services – then it would “count” and you would not be charged the penalty (tax). I’m not sure how likely it is that a Canadian plan would go to the effort to meet the U.S. requirements, but it’s possible.
The money you pay for health insurance does not go to any special interest groups. By law, 80% of it (85% for large groups) goes to pay medical bills and 20% (15% for large groups) goes for quality improvement projects, administration, and profit. If the insurer spends less on medical bills, the difference gets paid back to you.
I suppose special interest groups are getting more money by having more people insured, or having services paid for by health insurance. You can avoid lining someone else’s pocket by going without health insurance and paying the (comparatively low) penalty. The IRS cannot collect the penalty from you. On the other hand, if you have a house, a savings or retirement account, a car, a boat or any other property that you have warm feelings for, you might want some health insurance. Otherwise, a hospital could take those away from you.