Nearly 9 of 10 who seek individual market health insurance never buy a plan, says study

Healthcare Financial Management, Oct, 2006

A report released in September by The Commonwealth Fund finds that, as employers cope with rising healthcare costs by dropping health benefits or increasing employee cost- sharing through higher deductibles, workers and their families are being squeezed. When people lose coverage, many who turn to the individual insurance market find that coverage is unobtainable or unaffordable. The report also finds that those with high-deductible health plans are more likely than those with lower deductibles to have burdensome medical debt and to forgo needed health care; those with low incomes are especially at risk.

Of working-age adults who sought coverage in the individual market during the past three years, 89 percent ended up never buying a plan; 58 percent found it very difficult or impossible to find affordable coverage; and 21 percent were turned down, were charged a higher price because of a pre-existing condition, or had a health problem excluded from coverage.

"Most of the increase in the number of uninsured Americans--now upwards of 46.6 million--was due to a decline in workplace coverage," said Commonwealth Fund assistant vice president Sara Collins, lead author of the report, Squeezed: Why Rising Exposure to Health Care Costs Threatens the Health and Financial Well-Being of American Families. "Although the individual market is a last resort for those shut out of employer-sponsored coverage, it is by no means a safe or secure haven for everyone."

The report, based on findings from the Commonwealth Fund 2005 Biennial Health Insurance Survey, also highlights the increasing cost burdens families are facing due to the decline in the quality of coverage and more cost-shifting to employees. Adults with high-deductible health plans--those with individual market or employer-based coverage--have higher out-of-pocket costs than do those with lower-deductible plans. In addition, many adults with such plans are left with burdensome medical bills because of limits to their insurance coverage. Of those with deductibles over $1,000, 40 percent had expensive medical bills for services not covered by their insurance, compared with about 19 percent of those with deductibles under $500.

Those with high-deductible health plans were also more likely to report that they did not get needed health care or prescription drugs because of costs. In addition, many adults with such plans said they had problems with medical bills or were paying off medical debt over time and were more likely to give low ratings to their coverage. Two of five (41 percent) of those with deductibles over $1,000 had medical bill problems compared with about a3 percent of those with deductibles under $500. Of those with higher deductibles, 41 percent rated their health plan fair or poor, compared with 15 percent of those with lower deductibles.

"We need a national solution to the problem of affordable and comprehensive coverage for all," said Commonwealth Fund President Karen Davis, "following the lead of states like Maine, Massachusetts, and Vermont that have expanded coverage through shared financial contributions from individuals, employers, and government."

Other key findings from the report include:

* Two of five (43 percent) adults with individual coverage spent 5 percent or more of income on premiums, compared with 14 percent with employer-sponsored coverage.

* Of adults with individual coverage, 37 percent have annual deductibles of $1,000 or more.

* Adults with high deductibles are less satisfied with the quality of the health care they have received: 29 percent of those with deductibles over $1,000 are very satisfied with quality, compared with 54 percent of those with deductibles under $500.

* Of those with deductibles over $1,000, 44 percent experienced problems with access to care (didn't fill a prescription; didn't see a specialist when needed; skipped a recommended test, treatment, or follow-up; or had a medical problem and didn't go to a doctor or clinic) compared with a5 percent of those with deductibles under $500.

* One-fifth (22 percent) of those with higher deductibles took on credit card debt to pay medical bills, compared with 8 percent of those with lower deductibles.

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