Jackson Hewitt Tax Service Inc. has just sent me a report on an important but little-understood fact about low-income and moderate-income people who are uninsured: 27 percent have no checking account.
The percentage of uninsured people who are also “unbanked” is even higher in the states where the U.S. Department of Health and Human Services (HHS) expects to run Patient Protection and Affordable Care Act (PPACA) exchanges starting in October.
Jackson Hewitt analysts note that many of the insurers that intend to sell health plans through the PPACA exchanges want to require customers to pay premiums automatically through a checking account.
That kind of requirement may help insurers reduce administrative costs, but Jackson Hewitt argues that it could shut as many as 8 million people out of the new PPACA advance premium tax credit program, which is supposed to help the working poor pay their share of the cost of health insurance.
Jackson Hewitt wants federal regulators to solve the problem by requiring insurers to accept other commonly used forms of payment, such as prepaid debit cards.
Federal agencies already use prepaid debit cards to send payments to about 5 million unbanked people, the company says.
On the one hand: The idea of requiring exchange plans to take prepaid debit cards sounds as if it’s way more complicated and expensive in real life than a lay reporter would think, but that it’s the kind of change that health insurers probably ought to make, anyway. Maybe spending the money to move away from reliance on nineteenth-century-style checking accounts is something that insurers ought to be doing whether PPACA exists or not.
On the other hand: What hit me about the Jackson Hewitt paper is that being “unbanked” must be as bad for people in some ways as being “uninsured,” but that Congress has unleashed the hounds of regulatory heck on the health insurance industry without doing anything new to get the banks to help the unbanked.
Stipulated: About 80 percent of the readers here hate PPACA with bitter passion; about 10 percent of the readers love PPACA, and think the people who hate PPACA have Drunk the Kool-aid; and about 10 percent must (like me) talk to people on both sides, and we’re lying low because we’re afraid of getting hit by fire aimed at the other guys, or beat up because we’re viewed as annoying weasels.
At this point, the PPACA haters are preparing to call me a Marxist-Leninist; the PPACA lovers are prepared to call those folks and, maybe, me, Nazis; and the folks who have to talk to people on both sides are trying to hide under a strong metal desk.
But, anyhow: If you assume as a (possibly far-fetched) given that the PPACA health insurance laws, tax credit program and exchange system will come to life pretty much as described in PPACA: Why should the health insurance community have all of the PPACA fun?
Why not make banks and other financial institutions — which are already supposed to have brick-and-mortar offices in low-income neighborhoods — all act as unpaid or $48-per-head exchange plan enrollers?
Why not make the financial institutions simply open a free, bare-bones checking account for uninsured people who are also unbanked?
On the third hand: The answer is pretty clear. The banks have a pretty huge lobbying operation that would keep that from happening.
Whether you love the goals of PPACA or hate them, or are just an actual or fake swing voter hiding under a metal desk, one of the problems with using government programs to achieve social goals is that allocation of burdens may end up having little to do with either social need or free-market, efficiency-promoting forces, and a lot to do with who has the biggest, baddest lobbying team.
- On the Third Hand: The boy who cried rate shock
- On the Third Hand: Metrics
- On the Third Hand: Broker skin