Washington

Individual health insurance coverage is easier to obtain and less restrictive than is commonly believed, according to a study released recently by America’s Health Insurance Plans.

The results of the study, which was based on responses to a survey of AHIP member companies, “demonstrate that the individual health insurance market is playing an important role in providing substantial access and significant protections for consumers,” says AHIP President Karen Ignagni.

According to the study, individuals purchasing their own single coverage paid an average annual premium of $2,268, and those purchasing family coverage paid an average annual premium of $4,424. By comparison, AHIP said the average annual premium for an employer-sponsored plan was $3,696 for an individual and $9,948 for family coverage.

Also of importance, according to Jim Oatman, senior vice president and chief actuary of individual medical for Milwaukee-based Assurant Health, are the study’s findings on the affordability of and access to individual health insurance plans, which contradict the coverage’s image as expensive and restrictive. Instead, he says, the study showed that “given the wide variety of carriers and coverage, you can effectively customize your coverage to meet your particular needs and your particular budget.”

Much of the misconception surrounding individual coverage, Oatman says, can be traced to two factors. The first of these is the system of employment-based health care coverage. Employers generally pay the bulk of health care premiums for their employees, Oatman says, meaning that much of the costs of coverage are “hidden from the individual.”

Second, he notes, individuals seeking to purchase their own health insurance coverage sometimes can be confused by the wide variety of specific add-ons that can be added to coverage, and can end up purchasing coverage for minor things that would better be paid for out-of-pocket. Oatman says this was roughly akin to “including oil changes on your auto insurance.”

AHIP noted in the study that the U.S. Census Bureau estimates that over 16 million non-elderly Americans purchased health insurance coverage in the non-group market in 2003, the most recent year for which data is available.

Although there are significant differences in premium levels from state to state based on demographics, consumer preferences and regulations, the AHIP study found that 94% of the individual policies in the study were sold in states where the average premium was under $3,000 and 98% of family policies were sold in states where the average premium was under $6,000.

Oatman also notes the “marked contrast” between certain states, most notably California and New Jersey. The lowest premiums, at an annual average of $1,885, were found in California, which also had by far the most policies at 680,338, over half of those included in the study. Although having the fourth highest number of policies included in the study at 27,198, New Jersey also had the highest premiums at an average of $6,048 annually for single coverage.

AHIP noted in the study that it would share its data with policymakers, which Ignagni says she hoped would help improve regulation of health policies from state to state by clearing away the preconceived notions surrounding individual health insurance plans. Among the goals, she says, was to encourage states to remove costly coverage mandates that could help encourage those without coverage to consider getting their own policy. Oatman suggests legislation that would expand the use of Health Savings Accounts, either through tax deductions or tax credits. “That kind of expansion,” he says, “would help those people on the margin.”

Conducting the study, which she notes is the largest ever of the individual health insurance market, was about providing meaningful data, Ignagni says.

“Providing data generates thoughtful conversation,” she adds. “Without data, all you have are misconceptions and stereotypes.”

16 million non-elderly Americans purchased health insurance coverage in the non-group market in 2003