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Study: Individual Health May Be More Stable

By Staff Writer

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For workers in fair or poor health, owning individual health insurance seems to offer more security than relying on employer-sponsored small-group health coverage does.

Mark Pauly and Robert Lieberthal, researchers at the University of Pennsylvania, come to that conclusion in a paper published in the Web version of Health Affairs, a health finance academic journal.

The work was funded by the Office of the Assistant Secretary for Planning and Evaluation, an arm of the U.S. Department of Health and Human Services.

Pauly and Lieberthal used data from the federal Survey of Income and Program Participation. The researchers looked at workers with at least 1 year of continuous health coverage during the period that extended from 2000 to 2004.

Workers rated their own health as being excellent, very good, good, fair or poor.

The typical worker included in the data was in very good health.

For workers in very good health, “the coverage-loss rates for group coverage were consistently lower than those for individual coverage,” the researchers write in the paper. “However, the most striking finding is that this order is reversed for group workers with ‘fair’ or ‘poor’ health status.”

Sicker workers who began with small-group coverage were much more likely than workers with individual coverage to lose all coverage, the researchers write.

For a 45-year-old male with $80,000 in annual family income expecting an 8% increase in income, the risk of losing individual health coverage was about 16% at all health levels.

For a 45-year-old male with $80,000 in annual family income expecting an 8% increase in income, the risk of losing small-group coverage ranged from 5% for a worker in excellent health to 20% for a worker in poor health.

For a similar male with large-group coverage, the risk of losing coverage ranged from 8% for a worker in excellent health to 22% for a worker in poor health.

For a 28-year-old female with $50,000 in annual family income expecting a 4% increase in income, the risk of losing individual health coverage was 17% at all income levels.

For a 28-year-old female with $50,000 in annual family income expecting a 4% increase in income, the risk of losing small-group health coverage ranged from 9% for a worker in excellent health to 35% for a worker in poor health.

For a similar female with large-group coverage, the risk of losing coverage ranged from 6% for a worker in excellent health to 17% for a worker in poor health.

“Group insurance has a tear in its net of protection,” the researchers write. “It leaves a person who becomes a high risk more vulnerable to dropping or losing any and all coverage than does individual insurance.”