People who buy their own insurance report that their insurers most recently requested premium increases averaging 20 percent, according to a new Kaiser Family Foundation survey examining the experiences and views of people who buy health coverage in the individual market.
Overall, roughly three in four people (77 percent) with non-group coverage report facing a premium increase with a current or previous insurer. Most said they paid the increase, but 16 percent of all policyholders say they switched plans, either buying a less expensive policy from their current insurer or switching companies altogether.
After taking these so-called “buy downs” into account, those who faced a premium increase ended up paying 13 percent more than before.
Many of those facing a premium increase who, as a result, switched to a cheaper policy said they now have less comprehensive coverage than before. The survey found that those who switched are more than four times as likely to say their new plan offers worse benefits than their previous plan (49 percent) as they are to say their new plan’s benefits are better (11 percent).
While most people in the United States obtain health insurance through their employer, about 14 million people younger than 65 have coverage through the non-group or individual market, which has faced scrutiny recently in news reports about insurers’ steep rate increases and in the market reforms in the new health reform law, much of which is set to begin taking effect in 2014. Kaiser’s “Survey of People Who Purchase Their Own Insurance” provides insight into the current state of the non-group market. It is based on a nationally representative random sample of 1,038 people ages 18-64 who purchase their own health coverage, and was conducted between March 19 and April 2, during the final congressional debate and enactment of health reform legislation.
Premiums and deductibles
More than half (57 percent) of those with non-group insurance said they are the only ones covered by their policy. This group reported average annual premiums of $3,606, less than the average $4,824 premium reported in 2009 for employer-sponsored coverage (which typically provides more comprehensive insurance).
Among those whose policies cover not only themselves but also other family members, the average annual premiums are $7,102. Since insurers tend to vary premiums by age in the non-group market, older people reported paying higher premiums than younger people, both for individual and family policies.
Many people reported having plans with high deductibles, including 26 percent with an annual deductible of $5,000 or more and 6 percent with a deductible of $10,000 or more.
Overall, the average deductible reported for single coverage is $2,498 – almost four times the $634 deductible reported on average for employer-sponsored PPO coverage. Those with family coverage where deductibles must be met on a per-person basis reported an average deductible of $2,959, while those with a family deductible (the total spending required across the entire family before coverage kicks in) reported an average of $5,149.
Cost concerns among policyholders
Those who purchase their own coverage are much more likely to worry about being their ability to pay for health care than those with employer coverage.
For example, 40 percent of those who buy their own coverage said they are “not too confident” or “not at all confident” that they will be able to pay their usual medical bills – twice the share of those with employer coverage who said so in another Kaiser survey. Only 17 percent said they are “very confident” they could pay these usual bills, compared with 36 percent of those who have employer coverage.
A similar disparity exists when people are asked about their ability to pay for a major illness or injury that requires hospitalization. Fifty-one percent of those who purchase their own coverage said they are “not confident” they could pay their bills in such circumstances, compared with a 26 percent of those with employer coverage.
This lack of confidence may reflect real problems policyholders have experienced. Twenty-two percent said that, over the past year, they or a family member covered by their plan did not receive necessary medical care because of the cost, and a similar share (20 percent) said they skipped filling a prescription due to cost. Those who report a pre-existing condition are twice as likely as those without to report skipping needed medical care because of the cost (31 versus 15 percent) or not filling a prescription because of the cost (28 versus 14 percent).
Thirty-eight percent of policyholders reported having at least one problem getting their insurer to pay a bill, either because the plan paid less than they expected (31 percent), the plan would not pay anything for a bill they thought was covered (22 percent), or they reached the limit of what the plan would pay for a specific illness or injury (7 percent).
Who buys individual coverage?
The survey found that people who buy their own insurance are, on average, somewhat older than those with employer-sponsored coverage, but have similar incomes and health status.
When asked why they buy their own health coverage, 45 percent said it is because they are self-employed and small-business owners; one-quarter said they or their spouse work for an employer, but the employer either does not offer coverage or they are not eligible for, or cannot afford, the employer coverage.
When purchasing their current policy, 79 percent said they shopped around at different insurance companies – though fewer than half ended up applying to more than one insurer: Thirteen percent said they applied to two insurers, 28 percent to three or four, and 7 percent to five or more. Fifteen percent of those who shopped around (accounting for 12 percent of all those who purchase their own insurance) said that at least one insurance company refused to offer them a policy.
The vast majority (74 percent) of those who buy their own insurance said they’re likely to keep purchasing coverage on their own one year from now. Just over half (54 percent) think it would be difficult for them to switch plans if they wanted to. The most common reasons people think it would be difficult to switch is that they or someone else on their plan has a pre-existing condition (42 percent of those who say it would be difficult), they wouldn’t be able to find a price as low as they have now (26 percent), and it would be too complicated to look for a new plan (18 percent).