HEALTH PLANS/POLICY: More information on the individual insurance market, and yes it still sucks!

The Kaiser Family Foundation does a great job in putting health issues out there in an objective matter. Unfortunately their latest effort on the individual insurance market is, in their own terms, an attempt to get out information without implications. And this is a place in which the implications are clear but politically unpalatable.What does the report say? Basically insurers in the individual market sell policies with higher deductibles and lower premiums compared to those in the group market. Of course the individual market place has higher underwriting and administration costs (and distribution fees–think brokers). I’ve recently helped 2 (college educated & female) people understand their quotes and options in recent weeks. Basically you’re better off buying the cheapest plan with the high deductible because there’s a very close to 1 to 1 correlation between adding premium to reduce deductibles/max out-of-pockets, and of course if you stay healthy you may not ahve to pay those out-of-pocket costs. In addition in any one series of quotes for an individual the range of premiums versus benefits versus deductibles and out-of-pocket costs is bewildering–which results in many of my friends asking me to figure it out for them.

How is this study being reported? Modern Healthcare pulled this lead sentence out of the report for their Daily Dose newsletter "Group health insurance for an individual was nearly twice as costly as individual coverage bought on the market" That’s true as far as it goes, but you actually have to watch the video and dive into the report before you figure out that, dollar for dollar spent on premiums, benefits in the individual market are worse than in the group market.The panel which included a KFF staffer, the CEO of eHealthinsurance and a California Blue Shield exec also distinguished between short term and long term policies. One stated difference between short-term and long term is that short-term ones are not renewable. The other issue not raised by the panel was that short-term policies are not individually underwritten….once you get past the few questions on the short-term form declaring you don’t have some dread disease, you’re in. Conseuqntly many people spend years stringing together short-term polcies from different companies. However most long-term individual policies are underwritten by the insurer which looks at your recent medical history, which of course may include several not quite so dread diseases/episodes which might still bump up your premiums drmatically.One audience question resulted in the answer that if an insurer cannot deny coverage to "sick people" it doubles the premium. The defensive answer from the panel was that it’s only bad in states where they have community rating (e.g New York), but that’s actually rubbish. I applied via eHealthinsurance for a Blue Shield policy in California (which couldn’t be more in this report’s wheelhouse given that those are the two companies taking part) in 2003. I was quoted $60 a month for a high deductible plan but when they found I’d had surgery the year before the exact same policy went to $300 a month.However, eventually Gary Claxton from KFF said the key point. In 90% of states sick people can be be excluded. Either insurers are not writing them insurance or charging them way way too much. In other words health insurance in the individual market isn’t available for many if not most of the people who actually need it. I’m a good example of this as I’ve been forced to find a trade association group to join via which I could join a buying group (PacAdvantage) so I can buy an expensive but not outrageous plan. Of course if I get healthier and can get away with a cheaper individual plan, I’ll leave the group and contribute to its own insurance death spiral.So depsite all the nice words, the individual insurance market continues to suck. That’s essentially the same conclusion that noted commie Mark Pauly came to in Health Affairs a couple of years back. Well he actually said that 80% of consumers in the individual market do OK, while 20% find it doesn’t work for them. As it stands the market is unreformable. Saying that it’s 80% OK is a little like saying that 80% of Iraq is OK because it’s not actually blowing up right this minute, and the situation there is all fine and dandy. But why would we want to just focus on the bad news?

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