SD UT Shrinking coverage stings those on individual plans

[question everything]

By Leslie Berestein
STAFF WRITER

August 24, 2004


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More than it has for perhaps any other group of consumers, the rising cost of health insurance has become a source of frustration for the individually insured: self-employed entrepreneurs, freelancers, independent contractors, small-business owners, pre-Medicare retirees and others who pay their own way on individual health plans. Some 6.6 percent of Americans under age 65 – or 16.5 million people – buy their own health insurance, according to the U.S. Census Bureau. Most people 65 and over have Medicare.

Individual policyholders have always had it tougher than their company-employed peers in some ways. They are subject to tight underwriting rules and must pay for age-related increases in premiums, things most employer-covered workers don't face. Now, as health premiums spiral upward, there is no buffer for them. With no employer to pick up part of the tab, these individual policyholders have taken a direct financial hit in the past three years; health insurance premiums have grown by more than 10 percent annually. Some have seen their premiums as much as double, even while some of their benefits have shrunk.

Many are voluntarily cutting their own benefits to stay covered. Just as employers have been "buying down," an insurance industry term for buying cheaper, leaner health plans, so have many individually insured enrollees, often switching to the skimpiest of plans to keep premiums down. They have also had their benefits reduced by insurers cutting back on spending. Insurance companies are rolling out rock-bottom individual plans with minimal benefits to meet demand. Some consumers, in hopes of merely maintaining the same rates they paid for richer policies until recently, are taking on deductibles as high as $5,000 to stay minimally covered. Those who want to switch to a cheaper plan but have health problems are most often stuck with their high rates, since insurers can turn away individual applicants because of pre-existing conditions. Some with no alternative have gone to work for employers who can pick up part of the tab. Others are giving up, letting their policies lapse and hoping they don't get sick.

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In a practice commonly referred to as cherry-picking, insurers can legally turn away individual applicants for pre-existing health problems, something they are barred from doing when a sick person joins a group health plan. Insurers do this because, with an individual policyholder, they are unable to spread their risk as they can with groups.

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Those who can switch to a cheaper plan on their own have an increasing number of barely-there options to choose from. Aware of the desperation of consumers in the individual-plan market, insurance companies have recently unveiled a crop of policies that enable policyholders to save money on premiums but that provide minimal benefits... Insurers, who blame rising premiums on high hospital, pharmaceutical and other costs, say plans like these are aimed at keeping people insured – and keeping them as customers.

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Find this article at:
http://www.signonsandiego.com/uniontrib/20040824/news_1n24self.html


Leslie Berestein: [phone]; [email protected]