Why Individual Health Insurance Is Becoming Popular

Why Individual Health Insurance Is Becoming Popular

Individual health insurance (also called “non-group” health insurance) is generally purchased by those, who are not eligible for employer-sponsored plans. The individual health insurance market acts as a vital source of protection to millions of Americans, who do not have access to employer-sponsored health coverage. While it acts as a protective shield to individuals, this also suffers from the two most common criticisms. First, it is prohibitively expensive. Secondly, it is only available to the healthiest Americans. Undoubtedly, these issues are important. While many still rely on anecdotes and hypothetical examples, data are now becoming available, which demonstrate the affordability of individual coverage and the reasons, why individual health insurance is becoming popular.

A recent survey of three insurance companies (eHealthInsurance, HIAA and Center forStudying Health System Change) actively marketing individual medical policies shows that a large majority of people, who lack employer-sponsored health insurance, can easily obtain affordable coverage from an individual policy.

The study by the Health Insurance Association of America (HIAA) found that, even in states that allow insurers to consider the applicants’ health, nearly nine out of every 10 properly completed applications for individual health insurance result in an offer of coverage. Seventy one percent of completed applications for an individual policy resulted in an offer of full coverage at standard rates, while an additional 22 percent received offers of insurance with limits on the coverage, or at higher than standard premiums, or both. Because of health reasons, fewer than 12 percent of all completed applications submitted to the companies surveyed were declined.

According to HIAA president Donald Young, M.D, this survey provides solid evidence that the individual market works well for the vast majority of those who don’t have access to health insurance through their job and it also reinforces the importance of buying health insurance before illness or other medical misfortune strikes.

In July, the Center for Studying Health System Change released the results of a study that estimated an average annual premium of $2,568 for single coverage. However, this estimate was based on a sample of only 2,500 individual insurance policies, and was adjusted to represent a hypothetical population of individuals eligible for a tax credit, rather than current purchasers.

HIAA Premium Survey Results

Insured Age

Single
Insured
Count

Family
Count

Average Annual

Premium

Single Family

0-19

46,438

11,435

$988

$1,713

20-24

68,308

4,890

1,038

2,283

25-29

82,138

17,710

1,160

2,628

30-34

69,107

41,545

1,410

3,081

35-39

66,243

65,479

1,671

3,360

40-44

66,970

80,903

1,983

3,781

45-49

69,656

78,699

2,285

4,097

50-54

72,913

60,027

2,749

4,696

55-59

72,602

39,525

3,277

5,530

60-64

77,240

22,739

3,642

6,227

Total

691,615

422,952

2,070

4,009

The study says that with the lack of an employer contribution and, for many, the inability to deduct premiums for income tax purposes, consumers in the individual market may chose to buy somewhat less coverage than the typical employee benefit plan. Even so, the survey shows that individual health insurance is readily available and affordable. The study may overstate the number of people denied coverage for health reasons because people in poor health may apply with multiple insurers.

Young said insurance companies belonging to HIAA support state-based high-risk pools for those individuals denied coverage because of health conditions. This approach guarantees access to health insurance, and limits the premiums paid, even for people with serious health problems, without harming the consumers relying on the broader market.. He indicated 29 states have already created such a high-risk pool.

The survey on availability of coverage examined data for more than 500,000 applications, and the premium survey included nearly 700,000 persons with single coverage and over 1.3 million with family coverage. So, it clearly demonstrates why individual health insurance is getting popular day by day.

Submit a Comment

Your email address will not be published. Required fields are marked *

css.php