Kaiser Family Foundation
June 21, 2010
Recent Premium Increases Imposed by Insurers Averaged 20% for People Who Buy Their Own Health Insurance, Kaiser Survey Finds
People who buy their own insurance report that their insurers most recently requested premium increases averaging 20 percent, according to a new Kaiser survey examining the experiences and views of people who buy health coverage in the non-group or individual market.
Most say they paid the increase, but 16 percent of all policyholders say they switched plans, either buying a less expensive policy from their current insurer or switching companies altogether. After these so-called "buy downs" are taken into account, people who faced a premium increase ended up paying 13 percent more than before.
Many people report being in plans with high deductibles, including one in four (26 percent) with an annual deductible of $5,000 or more and 6 percent with a deductible of $10,000 or more.
Overall, the average deductible reported for single coverage is $2,498, almost four times the $634 deductible reported on average for employer-sponsored PPO coverage. Those with family coverage whose deductibles must be met on a per-person basis report an average deductible of $2,959, while those with a family deductible (the total spending required across the entire family before coverage kicks in) report an average of $5,149.
More than one in five (22 percent) say over the past year they or a family member covered by their plan did not get needed medical care because of the cost, and a similar share (20 percent) say they skipped filling a prescription due to cost.
Nearly four in ten policyholders (38 percent) report at least one problem getting their insurer to pay a bill.
"With people in the individual market being hit with average increases of 20%, the survey shows that the steep increases we have been reading about over the last several months are not just extreme cases," Kaiser Family Foundation President and CEO Drew Altman said.
Comment: This survey is very important because it shows that outrageous insurance premium increases are not limited to the anecdotes that we have been hearing, but rather are a pervasive problem, inflicting the nation with an average 20 percent premium increase in the individual insurance market. Those who say that the Patient Protection and Affordable Care Act (PPACA) will fix this had better take a closer look.
With these increases, it is not surprising that many looked for less expensive plans, usually opting for higher deductibles. But look at the numbers. The average deductible for a family is now over $5000, and for some, $10,000 or more. In spite of all of the buy-downs to higher deductible plans, people still ended up this year paying an average of 13 percent higher premiums - paying more and getting less.
Will PPACA provide relief from these high deductibles that are impairing access to needed medical care? No. The plans will be required to have an actuarial value of only 60 percent, or 70 percent for the exchange plans eligible for premium credits. When the patients' share averages 30 to 40 percent of the costs (plus the premium), it is inevitable that the plans will have high deductibles.
Will the cost sharing subsidies of the exchange plans adequately ameliorate the impact of the deductibles? No. Lower income individuals do not have adequate disposable income to meet their portion of the cost sharing, even with the subsidies. For those with incomes over 250 percent of the federal poverty level ($55,125 for a family of four), there are no cost sharing subsidies beyond the equivalent of a 70 percent actuarial value. The portion of the subsidized insurance premium that this family would still have to pay is $4438 (8.05 percent of income), so with a $5000 deductible, they would have to pay over 17 percent of their income before coverage begins (except for limited preventive services), and even then they would still have coinsurance payments plus costs for non-covered or most out-of-network services. By any definition, that is underinsurance, which will become the norm for the United States.
The problem is not the total cost of health care for our nation. We can afford it, though we are nearing our collective tolerance. The problem is the fragmented, dysfunctional financing system that results in tremendous inequities and runaway cost increases. A single payer national health program would fix this.
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