Study: Many Boomers Outside Groups Lack Nongroup Health Coverage

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Sellers of private individual and family health insurance have failed to reach hundreds of thousands of high-income, uninsured baby boomers.

Insurers are selling individual coverage, family coverage and other forms of nongroup coverage to only 57% of the 3.7 million high-income boomers who lack access to government or employer-sponsored coverage, according to a new study by John Holahan, a researcher at the Urban Institute, Washington.

Health policy experts often blame medical underwriting barriers for keeping some high-income consumers from buying health coverage. But Holahans statistics show that private insurers have sold nongroup coverage to about 71% of the 1.2 million high-income “near elderly” consumers who have to buy their own health coverage.

Holahans study draws on newly released 2002 Urban Institute survey results and projections for the entire U.S. population based on those survey results. Holahan gives far more information about the correlation between income, age and health coverage rates than the U.S. Census Bureau gives in the tables based on its health coverage survey results.

Holahans study does not provide a perfect contrast between baby boomers and members of the Silent Generation. He uses a “near elderly” category that includes adults who were between the ages of 55 and 64 in 2002.

He also uses 2 categories for adults who were between the ages of 35 and 54 in 2002.

Because the baby boomers were between the ages of 38 and 57 in 2002, Holahans 35-54 categories include about 6 million members of Generation X, and his near elderly category includes more than 7 million members of the Silent Generation.

Holahan also uses a fairly loose definition of “high income”: The high-income consumers in his study earn 400% of the federal poverty level. That translates into about $50,000 for a married couple whose children have moved out.

“In some areas, thats not so much money,” says Janet Trautwein, vice president of government affairs at the National Association of Health Underwriters, Arlington, Va. “These people might be struggling to pay their monthly bills.”

But Holahan counted about 1.6 million relatively high-income people in his 2 boomer categories who were uninsured in 2002 and about 341,000 near elderly people who were uninsured.

Experts have pointed out that some older consumers have a hard time buying private individual or family health coverage because they already are sick. Holahan does not give an estimate of the number of uninsured boomers who are in fair or poor health. But his figures show that, even among high-income near elderly residents who are uninsured, 93% are still working and 76% say they are in good, very good or excellent health.

What can agents do to close the 14 percentage-point gap between the nongroup health coverage penetration rates for baby boomers and members of the Silent Generation?

One place for agents to start is to find coverage for boomers who want health coverage but have a hard time finding it because they have mild health problems.

Bernie Rabinowitz, a senior consultant in the Chicago office of Reden & Anders Ltd., recommends that agents focus on the basics, such as shopping for high-deductible health insurance for boomers with health problems and looking for carriers with looser underwriting standards.

Agents who want to reach healthy uninsured boomers may have to work hard to convince them that buying coverage is worth the cost even for people who are healthy today, and agents who want to reach uninsured boomers with serious health problems might have to rethink their goals, experts interviewed say.

In theory, health insurers might be able to serve uninsured boomers with health problems simply by offering more rating categories. But state laws and regulations limit rating flexibility in some states, and, in others, selling coverage to substandard boomers for too high a rate would be counterproductive, Rabinowitz says.

“Theres going to be selection against the rate,” he says. “Its just going to lead to a spiral in price.”

The spiral will develop because boomers who are willing to pay a very high rate for coverage may be even sicker than the underwriters realize, and rate increases necessary to pay the claims filed by the insureds who are sicker than expected will drive away the other insureds, Rabinowitz says.


Reproduced from National Underwriter Edition, September 23, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.