What happens if you have no health insurance?

For some people, health insurance might seem like something that's not affordable or simply not a necessity. In fact, it was reported that in 2020 31.6 million people had no health insurance at all. And coverage cost was the main reason that adults aged 18-64 were uninsured during 2019.

The costs of forgoing health insurance, however, may be more than just adding a monthly budget line item. There may be a penalty for not having health insurance. Those without health insurance have lower rates of preventive care than those with insurance, which may lead to lack of diagnosis for chronic or severe conditions. And health visits that do require care may lead to insurmountable medical bills. What's the true cost of no health insurance? Here are some insights.

The financial costs can be devastating

Visiting a doctor for routine checkups and when you're sick is a way to keep chronic or temporary illnesses from getting worse. When you have health insurance, services like routine checkups, flu shots, colonoscopies, mammograms and pap smears are typically covered at no cost to you. In addition, think about what you would do if you were in an accident or became very ill. Is it better to pay for insurance or risk the high price of medical treatment and possibly incur medical debt?

Hospitals frequently charge uninsured patients much higher rates than those paid by private health insurers and public programs. That's because insurers are able to negotiate discounts with medical providers. As a result, individuals with no health insurance are more likely to deplete their savings account, borrow money to pay medical bills and end up with medical bills sent to collections risking a decline in their credit rating. Medical bills are one of the leading reasons people file for bankruptcy.

Even though the 2019 Tax Cuts and Jobs Act repealed the penalty for no health insurance, certain states (Massachusetts, Washington DC, New Jersey, Rhode Island, California and Vermont) do have state mandates in place.

The health costs of no health insurance are high

Because of the cost of healthcare, many uninsured people either delay seeking medical attention or don't get the drugs and treatments their healthcare providers recommend, even for major health conditions and chronic diseases. As a result, uninsured Americans may experience poorer overall health and more hospitalization for what could otherwise be avoidable health problems for someone with health insurance. And to the contrary, those with health insurance tend to be healthier as they typically seek out medical care when necessary.

What to do?

You might want to shop for a lower premium policy with a high deductible. Even the most basic policy could give you access to negotiated discounts for charges and provide a cap on the annual out-of-pocket expenses. Those caps might be high, but they will likely be much less than paying the full price for a visit or procedures. You might have a $3,000 deductible for a procedure that costs $10,000. The $3,000 plus co-insurance might be the total out of pocket versus the $10,000 due if you have no insurance.