Survey Finds Individual Health Care Coverage Accessible, Affordable

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A comprehensive survey of the individual health insurance market released by America's Health Insurance Plans (AHIP) found that health care coverage is more accessible and affordable than is widely known. The survey found that premiums are affordable, most who applied were offered coverage, and that consumers have access to a wide variety of benefit options to meet their individual needs. In addition, health savings accounts (HSAs) continue to be a popular coverage option among consumers.

"Consumers purchasing individual health care coverage have access to a wide variety of affordable health care coverage options," said Karen Ignagni, President and CEO of AHIP. "Most applicants, regardless of age, were offered health care coverage at an affordable rate, giving them peace of mind and protecting their health security."

The new study, Individual Health Insurance 2006-2007: A Comprehensive Survey of Premiums, Availability, and Benefits, is the most comprehensive survey of the individual health insurance market and is a follow up to several previous AHIP surveys.

According to the survey, nine out of ten applicants (89 percent) who went through the application process were offered coverage. Forty percent of these offers were at standard premium rates and 49 percent were offered at lower (preferred) rates. Even among those age 60-64, seventy-one percent were offered coverage and three-quarters (74 percent) of these were at standard or preferred rates.

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Nationwide, annual premiums averaged $2,613 for single coverage and $5,799 for family plans in the 2006-2007 period. Premiums varied by state, reflecting a variety of factors, including premium rating and underwriting rules, differences in health care costs, demographics, and consumer benefit preferences. Premiums were significantly higher in states with restrictions on premium variation and underwriting, often known as "guaranteed issue" and "community rating." However, approximately 95 percent of the policies surveyed were sold in states where the average annual premium was under $3,400 for single coverage or $7,200 for family coverage.

Consumers in the individual market were offered a wide range of benefits, including mental or behavioral health, prescription drugs, preventive, and maternity benefits. Some level of behavioral health coverage was included in nine out of ten policies purchased. Coverage for complementary and alternative therapy was also quite popular, while vision and dental coverage were chosen much less frequently.

The most commonly purchased coverage option was preferred provider organization (PPO) / point-of-service (POS) coverage, representing 78 percent of single policies and 66 percent of family policies in force.

Health savings accounts (HSAs) continue to be a popular coverage option among consumers in the individual market. Ten percent of single policies and 23 percent of family policies chosen provided coverage in conjunction with an HSA. Notably, the average out-of-pocket maximum paid by consumers with an HSA policy often is not much higher than the average plan deductible, meaning many HSA plans consider the deductible to be the primary form of cost-sharing.

Most of the policies chosen had annual out-of-pocket limits under $5,000, and the average lifetime maximum benefit (among plans with a maximum) was nearly $4 million.

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