Individual Health Insurance Market Buffeted by Higher Premium Costs
Just as the debate on healthcare reform was coming to a close on Capitol Hill this spring, individuals who purchase their own health insurance were finding that most recent requests for premium increases from their insurers were averaging 20% nationwide, according to a new survey released Monday by the nonprofit Kaiser Family Foundation.
While individual or non group healthcare insurance covers 14 million individuals—or less than 10% of the individuals covered by employer-sponsored insurance (157 million) nationwide—this market has garnered its share of media attention in recent months as insurers sought higher premiums. The most visible example was a request for a 39% increase this spring in California by Anthem Blue Cross, which was later withdrawn.
The survey—conducted in March and April—shows that the sharp price increases for non-group health insurance that have been publicized over the last several months—are "not just extreme cases," said Drew Altman, the foundation’s president and CEO, at a briefing releasing the study.
But the survey results also show what challenges the individual market will encounter in the next several years—since many of the changes in the new healthcare reform law will not go into effect until 2014.
Overall, three-fourths (77%) of those individuals with non group coverage reported facing premium increases with a current or previous insurer. While most said they paid the increase, 16% said they switched plans—either purchasing a less expensive policy from the current insurer or switching companies, according to survey. Following these "buy downs," people still faced premium increases, paying 13% more than before.
Preexisting conditions played major roles in the non-group market's decision to purchase or switch insurance, said Mollyann Brodie, a foundation vice president and director of Kaiser’s Public Opinion and Survey Research. "So certainly there's some sense of being stuck in the plan that they are in."
"When we looked at the people in the non-group market who have a preexisting condition in their households, they were much more likely to express worry ... than people who were in this market without those health challenges," Brodie said.
In the survey, 81% of the non-group plan with preexisting conditions were worried that insurance companies would "raise premiums so much" that they wouldn't be able to afford coverage. Another 49% said they found it difficult to find a policy that served their needs.
More than half (57%) of those with non group coverage said they were the only ones covered by their policy. That specific group reported average annual premiums of $3,606—or less than the average $4,824 premium reported in 2009 for employer sponsored coverage, which often provides more comprehensive insurance.
For those with their own policies that cover them and also other family members, the average annual premiums were $7,102. With insurers often varying premiums by age in the non group market, older people reported paying larger premiums than younger people, both for individual policies and for family policies.
Among other report highlights:
- Of individuals in plans with high deductibles, one in four (26%) had an annual deductible of $5,000 or more and 6% had a deductible of $10,000 or more.
- Six in ten (61%) said it was very or somewhat difficult for them to afford the cost of healthcare and insurance. Nearly twice as many as the 33% of those with employer sponsored coverage said it was difficult for them to afford the cost of care at the end.
- Overall, the average deductible reported for single coverage was $2,498, almost four times the $634 deductible reported on average for employer sponsored PPO coverage.