Some Massachusetts consumers seem to be buying the health insurance they are required to carry when – and only when – they have health problems.
Dianna Welch and Kurt Giesa, actuarial consultants at Oliver Wyman Actuarial Consulting Inc., a unit of Marsh & McLennan Companies Inc., New York (NYSE:MMC), have published that conclusion in an analysis of the effects of Massachusetts health system change efforts on the individual health coverage market.
Massachusetts tried to help consumers in the individual health insurance market get easier access to coverage by merging the state’s individual and small group markets July 1, 2007.
Massachusetts requires carriers to use the same pre-existing condition limitations and waiting period rules in the individual market that they use in the small group market.
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“Although health carriers always applied waiting periods or pre-existing limitations for individuals, they did not generally apply them for small employers, due to the administrative burden of doing so,” Welch and Giesa write in their Massachusetts individual health insurance market analysis. “Consequently, when the markets were merged, health carriers stopped applying waiting periods or preexisting condition limitations to individuals. Now individuals become covered from the effective date of purchase for all services.”
Today, rates in the combined market are based mainly on the claims experience of small group members, the consultants say.
Massachusetts has tried to get younger, healthier residents into the pool of insured residents by requiring most Massachusetts residents to have a minimum level of health coverage.
The Massachusetts Division of Insurance decided to commission a study of the individual health market in the summer of 2009, when health carriers told the division they were seeing spikes in utilization among newly enrolled individual plan members.
“The health carriers indicated that more individuals were terminating coverage after having expensive medical procedures,” Welch and Giesa say.