A recent study by eHealth Inc. seems to indicate that the individual health insurance market is quite affordable, especially when compared with the group health insurance market. The study on individual health insurance is large, with a sample of over 227,000 individual health insurance policies that were active as of the summer of 2007. Some of the findings include:
- average premiums for individuals: $158/month (up from $148 in 2006)
- average premiums for families: $366/month
- average individual deductible: $1972
- average family deductible: $2610
If we look at the detailed findings of the study, Colorado has average premiums below the national rate, at $141/month for an individual. The high end of the scale mentioned in the article is for states like NY that don’t allow medical underwriting on individual health insurance policies. The result is that everyone gets covered, but everyone pays more. Colorado has laws regarding individual health insurance that are very similar to most other states – medical underwriting is permitted, and premiums can be based on health history. My own family has a health insurance policy with an annual premium of $5976, and a deductible of $3000 (unfortunately both a bit higher than the average found in the study). But it’s still a lot better than paying $12,000/year for a group policy.
While this study does make the individual health insurance market seem pretty rosy, there are a few issues that deserve a mention. Although a huge number of policies were sampled, the nature of the research meant that the policies had to be issued and in force in order to be included in the study. So only people who were healthy enough to be issued policies in the individual health insurance market were included (plus those in a few states like NY where individual policies are guaranteed issue). The results obviously don’t include those who were declined or had to obtain coverage through a state high risk pool (typically a much more expensive option). So while the individual health insurance market is great for healthy people looking for an affordable option for health insurance, the options are limited or non-existent for a lot of people with serious pre-existing health conditions.
The other issue is coverage. A deductible of $1972 for an individual and $2610 for a family might seem pretty high to people who are used to comprehensive group health insurance coverage. Deductibles have been steadily creeping up on group policies as employers seek to curb costs, but these numbers are still higher than most people are accustomed to. Maternity care is another factor that might catch a lot of people by surprise in the transition to individual health insurance. Maternity is one part of a group health insurance policy that a lot of women plan to use, as opposed to most parts of our coverage that we hope we never need. But in the individual health insurance market, maternity coverage is hard to find. Here in Colorado, there are only three carriers – Rocky Mountain Health Plans, Assurant, and Golden Rule/United Healthcare – that offer maternity coverage at all.
So while the numbers in this study do indicate that individual health insurance is a relatively affordable option, there’s still a whole group of people who are uninsurable in the individual market because of their health history. And the trade off with an individual health insurance policy is that your out of pocket expenses might be higher than you’re used to. But the upside is that if you’re healthy there are plenty of affordable options available, and in the event of a serious health problem, an individual health insurance policy will protect your assets. Which is why we have health insurance in the first place.
