Thursday, July 30, 2009

Unaffordable Private Health Insurance

The Commonwealth Fund has an interesting report re: the real-life availability of privately-purchased health care insurance in the US right now. I've copied in the abstract and overview below; the full report is available here.

The key points to me are that individuals who sought insurance on their own in the current marketplace were largely unable to purchase affordable plans, and even in the case of employer-provided plans there were issues of access.

A public insurance plan would provide an alternative to these over-priced and unaffordable plans. Without that, how would these policies be made more affordable and avaiable? I just don't see that the private market alone can compensate for this, otherwise wouldn't already be doing so?

Obviously, this doesn't even begin to address whether the unaffordable plans actually provide any significant/meaningful benefits...


Failure to Protect: Why the Individual Insurance Market Is Not a Viable Option for Most U.S. Families

Findings from the Commonwealth Fund Biennial Health Insurance Survey, 2007
Michelle M. Doty, Sara R. Collins, Jennifer L. Nicholson, and Sheila D. Rustgi

ABSTRACT: Between 2001 and 2007, an increasing share of adults with private insurance—whether employer-based coverage or individual market plans—spent a large amount of their income on premiums and out-of-pocket medical costs, were underinsured, and/or avoided needed health care because of costs. Those with coverage obtained in the individual market were the most affected. Over the last three years, nearly three-quarters of people who tried to buy coverage in this market never actually purchased a plan, either because they could not find one that fit their needs or that they could afford, or because they were turned down due to a preexisting condition. Even people enrolled in employer-based plans are spending larger amounts of their income on health care and curtailing their use of needed services to save money. The findings underscore the need for an expansion of affordable health insurance options, particularly during a time of mounting job losses.


Employer-based health plans are the predominant form of health insurance for U.S. working-age adults and their families. Over the last decade, however, the relentless annual growth in health care costs and premiums has made it increasingly difficult for employers—especially small businesses—to continue providing comprehensive benefits. The current recession, and the sluggish economic growth that preceded it, has only exacerbated this troubling trend.

Employers are responding to rising health care costs and declining economic growth by dropping coverage altogether, or by shifting to less-generous benefit plans that require workers and their dependents to pay more out-of-pocket for their health care The increase in the unemployment rate over the past year means that more and more Americans have lost their job-based health benefits.

For people who do not have employer coverage, the options for affordable health coverage are very limited. If they should lose their job, workers in firms with 20 or more employees can purchase, through COBRA, coverage from their former employer at the full premium; a federal subsidy of 65 percent of premiums is temporarily available through the American Recovery and Reinvestment Act of 2009 (ARRA).2 Coverage through state public insurance programs like Medicaid and the Children’s Health Insurance Program (CHIP) in most states is limited to children, pregnant women, and parents with low incomes, with less than half of states covering any adults without children. This means that people who work for companies that do not offer health insurance are largely limited to purchasing coverage directly in the individual market. People who buy coverage in the individual market must pay the full premium and, in most states, are rated on the basis of their health
or age—and can be denied coverage because of a preexisting condition.3

Drawing from the Commonwealth Fund 2007 Biennial Health Insurance Survey, this analysis compares the experiences of adults ages 19 to 64 who purchased coverage in the individual insurance market with adults covered by employer-based plans. It finds that nearly half (47%) of adults who tried to purchase insurance in the individual market in the last three years found it very difficult or impossible to find a plan that fit their needs; 57 percent found it very difficult or impossible to find a plan they could afford; and 36 percent said they were turned down or charged a higher price because of a preexisting condition. Nearly three-quarters (73%) of respondents said they never bought a plan, with 61 percent of those who did not buy a plan in the individual market citing expensive premiums as the main reason. Adults who do purchase coverage in the individual market pay more out-of-pocket for their premiums, face much higher deductibles, and spend larger
shares of their income on health insurance and health care expenses than their counterparts with employer-based group coverage.

The analysis also finds that between 2001 and 2007, an increasing share of adults with private insurance—whether employer-based plans or individually purchased plans—spent a large portion of their income on out-of-pocket medical costs and premiums, became underinsured, and/or avoided needed health care because of the cost. Adults with coverage obtained through the individual market were the most affected.

These findings indicate that the individual insurance market in its current form does not provide a viable alternative to employer-based group coverage. It also shows that even people in employer-based plans are spending increasing amounts of their income on health care and curtailing their use of needed services as a result. New, affordable health insurance options are needed for Americans who are currently uninsured or underinsured and for those who will lose access to employer-based benefits during the recession.

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