Changes in Health Insurance Market Met With Resistance

In a three-part series on the health care industry, the Los Angeles Times explored the effects of shifts in the health insurance market, including the move toward individual coverage and consumer-driven health plans and consolidation in the health insurance industry.  Summaries appear below.

Individual Coverage

Growing numbers of people are turning to individual health insurance policies, but insurers' underwriting and rescission practices are leaving many consumers uninsured, the Los Angeles Times reports.

Premiums for individual coverage are often higher than consumers would pay under group plans, and benefits are often less generous, the Times reports.

Health insurers are working to mitigate their risks by declining coverage for consumers with pre-existing medical conditions and those who exhibit a strong likelihood of incurring significant medical care in the future.

The situation has built support for health care reform efforts, including a call for universal coverage from Blue Shield of California CEO Bruce Bodaken.

The Times reports that "at the heart of the problem is the clash between the cost of medical care and insurers' need to turn a profit" (Girion/Hiltzik, Los Angeles Times, 10/21).

Consumer-Driven Care

WellPoint and other health insurers are offering more high-deductible health plans and health care savings accounts as part of a shift in the market toward consumer-driven health care, the Times reports.

HSAs allow consumers to deposit funds tax-free into an account that they can use for medical expenses. 

According to the Times, HSAs and high-deductible plans generally are more attractive to younger and higher-income individuals who then opt out of the traditional insurance market.  The move then shifts the insurance pool toward a generally unhealthier group of people. 

Kaiser CEO George Halvorson -- who is the outgoing chair of America's Health Insurance Plans -- is critical of HSAs and argues that they will not expand coverage to more Americans.

Supporters of consumer-driven health care argue that people will become more adept health care consumers if they are more aware of health care costs (Hiltzik, Los Angeles Times, 10/22).

Medical Bills

As health insurance companies merge and increase their market shares, physicians and hospitals complain that insurers are rejecting more claims and that administration is requiring more staff time, the Times reports.

According to the Times, about half of Americans with private coverage are members of plans offered by WellPoint, UnitedHealth Group, Aetna or Cigna, the four largest insurers in the nation.

A 2007 survey by the American Medical Association found that in two-thirds of metropolitan areas, one health insurer controlled at least 50% of the market. In the Los Angeles area, Kaiser Permanente and WellPoint's Anthem Blue Cross dominate the market, according to the Times.

As a result, a growing number of physicians are moving to "cash only" practices in which they bill patients directly and leave patients to seek reimbursements from their health plan (Costello et al., Los Angeles Times, 10/23).