Individual Health Insurance More Costly Due To Demand For Private Coverage
USA Today on Friday examined how costs for many individual health insurance policies are soaring at a time when more people are forced to buy their own health insurance because of job losses.
According to a report released last week by the ratings agency A.M. Best, enrollment in group health insurance plans is decreasing because employers are eliminating jobs. Insurers also face deflated investment portfolios and higher costs as patients use more health services. The combination of problems could lead to "higher [premium] rate increases than in the past," according to Sally Rosen, a managing senior financial analyst at Best.
Some health advocates say that unlike employers or other large group plans, the 17 million U.S. residents who purchase individual coverage are unable to negotiate lower premium rates. Jerry Flanagan, a health care advocate with Consumer Watchdog, said, "These folks have their back against the wall." Golden Rule Insurance, a part of UnitedHealth Group, said that sales of individual health plans in the past two months have increased 24%, and eHealthInsurance reported that insurance applications on its Web site rose 18% in the fourth-quarter, compared with the same period a year earlier.
Some of the larger health insurance rate increases this year on the individual market
* Anthem Blue Cross in California, which has informed about 80% of its 800,000 individual policy members of double-digit increases, many of which will be over 30%. Ben Singer, an Anthem spokesperson, cited rising medical costs for the increases;
* Blue Cross Blue Shield of Michigan, which has applied for state approval to increase its individual plan premiums by 56%, a move that BCBSM spokesperson Andy Hetzel said the insurer needs to make up for losses from new state rules that have designated it as the only insurer in the state for applicants;
* Regence Blue Cross Blue Shield of Oregon, which has announced a 27.1% rate increase for about 10,000 of its members in Washington state effective March 1; and
* LifeWise in the state of Washington, which increased its rates on Jan. 1 by 17.6%, the state Office of the Insurance Commissioner reported.
By comparison, a survey released by the Kaiser Family Foundation and Health Research and Educational Trust found that health insurance premiums for employer group health plans increased by 5% in 2008. Robert Laszewski, president of the consulting firm Health Policy and Strategy Associates, says that individual plan premium increases can cause "sticker shock" for people who are used to smaller increases under employers' group plans (Appleby, USA Today, 2/20).
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