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.

“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.

The division hired Oliver Wyman, and analysts from the firm collected and analyzed claims data with dates of service from Jan. 1, 2006, through Dec. 31, 2006, and from Jan. 1, 2008, to Dec. 31, 2008. The analysts were looking for evidence that the elimination of past curbs on the individual health market might have led to increased adverse selection.

The analysts found that the average number of covered individuals increased to about 107,000 in 2008, from about 46,000 in 2006.

The total number of “high-cost individual subscribers” – plan members with claims costs of $1,000 or more per month – increased to 7,185 in 2008, from 3,932 in 2006.

The percentage of individuals terminating coverage within their first year increased to 24% in 2008, from 14% in 2006.

One-year lapse rates increased dramatically both for low-cost individuals and high-cost individuals, with the number growing 223% between 2006 and 2008, to about 2,141, for high-cost individual subscribes, and more than 400%, to 24,000, for the low-cost subscribers.

High lapse rates for both types of individual subscribers are a problem, because both types drop out without paying for a full year of coverage, and the high-cost individuals have very high claims costs, the consultants say.

To address the problem of high-cost individuals quickly dropping coverage, “consideration should be given to either establishing separate preexisting condition limitation/waiting periods or creating an open enrollment period specific to individuals,” the consultants say.

To discourage low-cost individuals from flitting in and out of plans, “consideration should be given to strengthening the penalties in place now to increase the impact of the individual mandate,” officials say.

If Massachusetts let individuals buy health coverage only during designated open enrollment periods, or after major life events, such as the loss of a job, and the proportion of individuals dropped coverage within a year returned to 2006 levels, the merged individual and small group loss ratio might improve by 1.2 percentage points, the consultants predict.