Here's how easy it is for the government and the insurance industry to spend your money to solve their problems.
Today, the State of Ohio institutes a 4% increase in the cost of individual (non-group) health plans to subsidize the cost of similar plans for people with pre-existing health conditions.
Ohio insurers are required by law to offer "open enrollment" health plans to indviduals with pre-existing health conditions which might disqualify them from conventional health insurance coverage. The plans are quite costly; individuals covered under the plans spend an average of $800-850 per month for coverage, well over twice what healthier people pay for similar coverage.
The plans are also hard to find. Insurers are required to offer them to the public only one month per year, and there's no standard for informing the public (usually you'll find a box in the classified section).
For both these reasons, not many Ohioans participate in the plan. Only about 1,300 out of Ohio's million or so uninsured residents have signed up for them.
The State budget passed in July sought to create a subsidy for open enrollment participants by assessing a 5% rate increase on all health plans sold in Ohio, including small group health plans. That would have created a huge windfall for insurers who sell non-group plans, in exchange for solving a problem for only a relatively few people.
The Ohio General Assembly eventually abandoned that approach, choosing instead to focus the premium surcharge on individual health plans. (It's not clear that a similar effort to hike small group premiums could have stood up to constitutional review, but individual health plans are at the Legislature's mercy).
So the Ohio Department of Insurance has been given an "oversight" role, to monitor rates and report back to the Governor. Ostensibly, if overall rates in the individual market rise more than 5 1/2%, the Department will scale back on the subsidy for open enrollment plans. Translation: if so many sick people sign up for subsidized coverage that it drives rates up, the Insurance Department will use pricing to slow down the rate at which they sign up.
This is a sign of things to come. When insurers tell legislatures, as they've told the White House, that they'll gladly stop rejecting applicants with pre-existing health conditions as long as everyone must buy health coverage, what they're generally NOT saying is that the cost of that largesse will be paid for by raising rates for everyone else...all in the name of "shared responsibility." But the REAL effect is to provide insurers with a subsidy enabling them to sell more individual health policies. And eventually, the price won't matter, because the law will require everybody to buy a health plan, no matter what it costs.
Showing posts with label non-group health plans. Show all posts
Showing posts with label non-group health plans. Show all posts
Tuesday, September 1, 2009
Monday, August 10, 2009
A "Young Invincible" Worries About Health Insurance
Insurance people often talk about a group of the uninsured they call "the young invincibles"...young, healthy people, usually in their early- to mid-20's, who don't buy health insurance because they don't believe they need it. The insurers' pitch is that forcing all these young, healthy people to purchase health insurance coverage will solve the health insurance crisis.
The reasons, they say, are twofold: first, these young folks (mainly young men, the legends have it) are leading candidates to wrap their cars or motorcycles around a tree, fall off a hang-glider or bungee-jump into a canyon and bust their skulls on a rock, thus requiring extensive treatment for trauma for which they don't now have coverage; more prosaically, they tend to pay more in premiums than they use in benefits, and therefore are very profitable for the insurers, and so (the pitch goes) they add cash to the "risk pool," which somehow helps keep costs down for everybody else.
Set aside for the moment that, as usual, there's almost no objective third-party research which would indicate that any of this is particularly true or likely, except that young males are slightly more prone than average to experience an auto accident.
The fact is that young people who HAVE their own health insurance are far from worry-free, for the same reasons their elders worry about their own non-group health insurance.
When our son "aged out" of our group health plan, we helped him find his own individual health insurance coverage. He was 23 and in good shape, healthy lifestyle, the ideal young insurance customer. We found him a decent plan for about $125 a month. He was a college student, and now works only part-time, but he keeps up with his premium payments.
Except he's afraid to use his plan.
He's very concerned that while he may be healthy now, he could develop a chronic health condition, like his cousin. When he was diagnosed with a chronic
gastrointestinal disorder, his cousin's health insurance premiums quadrupled because, unlike with group coverage, there are no limits on how much insurers can raise the rates of individual customers based on their health.
And when his cousin tried shopping for coverage elsewhere, he found that his health condition rendered him "uninsurable" by any other insurer. So he bought a cheaper plan which featured a $5,000 annual deductible and which didn't pay out a dime in benefits till the deductible had been reached. And instead of paying $400 per month out of pocket for prescription coverage, he bought his medication on-line in Mexico for $55.
Ultimately, facing cancellation of his coverage, his cousin changed jobs so he could be covered by a large company's group health plan.
The advocates of "consumer-directed health plans (whatever they are)" like to say that high deductibles and co-pays make consumers less likely to "abuse" their health plans. But the best research shows that such individual health plans generally produce short-term savings for insurers when their customers put off necessary treatment or medication is too expensive to pay for on lower-wage jobs.
Our son looks at his current health insurance policy as a "placeholder" till he can find a job with group health insurance coverage.
Insurers, especially those who sell a lot of non-group health plans, like to tout the contention that "individual responsibility," which for them means dividing the world into actuarial universes of one, and selling each person a "custom-tailored" and individually-rated health policy, will somehow reduce net spending on health care services.
The reality is that in general, non-group coverage costs more, covers less, and is much less stable and reliable than any sort of group plan. And anybody covered by one knows he or she is just one illness or accident away from either dramatic increases in premium or outright cancellation of their health plans.
They are, however, extremely profitable for insurers, because until they experience that illness or injury, these "young invincibles" pay in far more in premiums than they take out in claims. Which means that insurers can either a) use the surplus to subsidize health coverage for everybody else, or b) keep the money.
Want to bet what really happens?
The reasons, they say, are twofold: first, these young folks (mainly young men, the legends have it) are leading candidates to wrap their cars or motorcycles around a tree, fall off a hang-glider or bungee-jump into a canyon and bust their skulls on a rock, thus requiring extensive treatment for trauma for which they don't now have coverage; more prosaically, they tend to pay more in premiums than they use in benefits, and therefore are very profitable for the insurers, and so (the pitch goes) they add cash to the "risk pool," which somehow helps keep costs down for everybody else.
Set aside for the moment that, as usual, there's almost no objective third-party research which would indicate that any of this is particularly true or likely, except that young males are slightly more prone than average to experience an auto accident.
The fact is that young people who HAVE their own health insurance are far from worry-free, for the same reasons their elders worry about their own non-group health insurance.
When our son "aged out" of our group health plan, we helped him find his own individual health insurance coverage. He was 23 and in good shape, healthy lifestyle, the ideal young insurance customer. We found him a decent plan for about $125 a month. He was a college student, and now works only part-time, but he keeps up with his premium payments.
Except he's afraid to use his plan.
He's very concerned that while he may be healthy now, he could develop a chronic health condition, like his cousin. When he was diagnosed with a chronic
gastrointestinal disorder, his cousin's health insurance premiums quadrupled because, unlike with group coverage, there are no limits on how much insurers can raise the rates of individual customers based on their health.
And when his cousin tried shopping for coverage elsewhere, he found that his health condition rendered him "uninsurable" by any other insurer. So he bought a cheaper plan which featured a $5,000 annual deductible and which didn't pay out a dime in benefits till the deductible had been reached. And instead of paying $400 per month out of pocket for prescription coverage, he bought his medication on-line in Mexico for $55.
Ultimately, facing cancellation of his coverage, his cousin changed jobs so he could be covered by a large company's group health plan.
The advocates of "consumer-directed health plans (whatever they are)" like to say that high deductibles and co-pays make consumers less likely to "abuse" their health plans. But the best research shows that such individual health plans generally produce short-term savings for insurers when their customers put off necessary treatment or medication is too expensive to pay for on lower-wage jobs.
Our son looks at his current health insurance policy as a "placeholder" till he can find a job with group health insurance coverage.
Insurers, especially those who sell a lot of non-group health plans, like to tout the contention that "individual responsibility," which for them means dividing the world into actuarial universes of one, and selling each person a "custom-tailored" and individually-rated health policy, will somehow reduce net spending on health care services.
The reality is that in general, non-group coverage costs more, covers less, and is much less stable and reliable than any sort of group plan. And anybody covered by one knows he or she is just one illness or accident away from either dramatic increases in premium or outright cancellation of their health plans.
They are, however, extremely profitable for insurers, because until they experience that illness or injury, these "young invincibles" pay in far more in premiums than they take out in claims. Which means that insurers can either a) use the surplus to subsidize health coverage for everybody else, or b) keep the money.
Want to bet what really happens?
Subscribe to:
Posts (Atom)
