January 2008
On their own
Far from a remedy, individual health insurance is a world of pain
ARTHRITIS QUANDARY "Do I put myself in the poorhouse, or do I drop my insurance?"
Photograph by Pete WinkekMaggie Frazier,
Cumming, Ga.
Cumming, Ga.
Imagine that shopping for a new car worked like this: If you really didn't need the auto and lived two blocks from work, any
dealer would sell you a car for a song. If the commute was 50 miles, much too far to walk, no one would sell you a car at
any price.
You wouldn't get to see a full contract until you plunked down your cash. Your monthly car payment would go up 20 to 30 percent every year, and, by the way, the steering wheel might be extra.
The auto industry doesn't work like that, of course, but the market for people who buy their own health insurance does.
"I have been living with a dark cloud over me, thinking I am one illness away from poverty," says Kathie Baughman, 57, a self-employed title searcher, of Howard, Pa. She couldn't get individual health insurance because she takes medication for high blood pressure and once had a lab test that detected slightly high blood sugar.
Our yearlong investigation of health insurance shows that consumers stuck in this market often have traumatic experiences.Here's what we found:
When Consumer Reports invited readers in September to share their individual health insurance stories online, hundreds responded. More than half
were trying to cope with the high costs and poor coverage of individual insurance.
You wouldn't get to see a full contract until you plunked down your cash. Your monthly car payment would go up 20 to 30 percent every year, and, by the way, the steering wheel might be extra.
The auto industry doesn't work like that, of course, but the market for people who buy their own health insurance does.
"I have been living with a dark cloud over me, thinking I am one illness away from poverty," says Kathie Baughman, 57, a self-employed title searcher, of Howard, Pa. She couldn't get individual health insurance because she takes medication for high blood pressure and once had a lab test that detected slightly high blood sugar.
Our yearlong investigation of health insurance shows that consumers stuck in this market often have traumatic experiences.Here's what we found:
- Consumers who bought individual health insurance on their own had higher costs and more limited coverage than people who had
insurance through an employer, according to a nationally representative survey by the Consumer Reports National Research Center.
Individual buyers were more likely to have complaints: 71 percent vs. 53 percent.
- People who consider themselves in fine health can be declined insurance because of previous treatment, even for conditions
such as hay fever and acid reflux.
- Enormous differences exist in state regulation of individual health insurance plans. A person who could easily buy individual
health insurance in one state could be shut out of the market in another.
- In our survey, 76 percent of people without insurance said they couldn't afford an individual plan. Indeed, only about 7 percent
of adults have individual insurance. Yet any adult who hopes to retire early, loses a job, is self-employed, or has an adult
child leaving a group plan could face the prospect of trying to buy such a policy.
Such insurance "is not an efficient way to cover people," says Sara Collins, an assistant vice president of the Commonwealth
Fund, a nonprofit research organization in New York. "It's very expensive. It's inequitable. When you're most in need, it
seems you lose access to it."
The insurance industry disagrees. "The availability and accessibility for those seeking coverage is very widespread," says Mohit M. Ghose, senior vice president of public affairs at America's Health Insurance Plans, the industry's trade group. He cited a 2007 survey of member companies showing that just 11 percent of individual applicants were turned down for health reasons.
But Collins says most people never get to the point of applying. A Commonwealth Fund national survey in 2005 found that 89 percent of people who looked into buying individual health insurance had not bought it because it was too costly, they were turned down for health reasons, or it provided inadequate benefits.
Reforming the health insurance system and reducing the ranks of 47 million uninsured Americans have emerged as major issues in this year's presidential race, with some candidates proposing to use tax breaks and the individual insurance market to solve the problem. But the stories of many consumers who struggle with high costs and a lack of access to individual health insurance because of medical conditions underscore the hurdles that must be cleared.
The insurance industry disagrees. "The availability and accessibility for those seeking coverage is very widespread," says Mohit M. Ghose, senior vice president of public affairs at America's Health Insurance Plans, the industry's trade group. He cited a 2007 survey of member companies showing that just 11 percent of individual applicants were turned down for health reasons.
But Collins says most people never get to the point of applying. A Commonwealth Fund national survey in 2005 found that 89 percent of people who looked into buying individual health insurance had not bought it because it was too costly, they were turned down for health reasons, or it provided inadequate benefits.
Reforming the health insurance system and reducing the ranks of 47 million uninsured Americans have emerged as major issues in this year's presidential race, with some candidates proposing to use tax breaks and the individual insurance market to solve the problem. But the stories of many consumers who struggle with high costs and a lack of access to individual health insurance because of medical conditions underscore the hurdles that must be cleared.
