INDIVIDUAL PREMIUMS: Soar As Sickest Bear The Brunt
The 16 million Americans under 65 "who have to buy their own health insurance are facing increases of 40% or more this fall," the New York Times reports. As a result, many individual policyholders "are a step away from joining the nation's 43.4 million uninsured." What's more, the rising premiums will likely create "a dynamic that appears certain to send prices even higher" -- an "insidious spiral that drives premiums still higher and throws more consumers off the rolls." That's because healthier and younger consumers are more likely to choose to go without insurance, leaving older, sicker consumers behind, which drives up the cost of premiums. Dean Rosen, senior vice president for the Health Insurance Association of America, said, "It's called, 'Sick people in, healthy people out.'" According to state regulators, "individuals' premiums are climbing at least twice as much as the increases in group-policy premiums that employers face next year," and are rising even faster than in the early 1990s, when widespread concern about the cost of health insurance prompted calls for federal reform. In Washington state, officials say "the average rate of unsubsidized, middle-class subscribers to a state-administered health plan rose 72% this year and will rise 62% next year." Individuals' premiums in Maryland are expected to rise in the "20%, 25%, 30% range," according to state Insurance Commissioner Stephen Larsen. Texas is seeing a range of "7.5% all the way up to 40%," according to Ana Smith-Daley, deputy commissioner for life and health insurance. And Connecticut expects to see the same 15% to 25% increase in the individual policies that it saw last year. "Tightly regulated" states like New York and New Jersey will only see increases of 10% and 14%, respectively.
The Heart Of The Problem
At the heart of the problem, the Times reports, is the breakdown of the community rating system, since most younger, healthier workers are now covered by their employers' group policies. This leaves "less healthy, often older consumers" alone in the pool of individual policyholders. "Lacking the cushion of legions of healthier subscribers, the companies insuring individuals spend more for their care and therefore must charge more," the Times reports. Kaiser Permanente spokesperson Beverly Hayon said, "We're saying that community rating is not possible" (Kilborn, 12/5).