High Deductible Health Insurance Common

By KRISTEN GERENCHER CBSMarketWatch

SAN FRANCISCO - People who buy major medical individual health insurance policies tend to pay at least $1,000 in deductibles, according to a new study.

Sixty-eight percent of people who bought individual policies from broker eHealthInsurance paid at least $1,000, while 40 percent of policies sold had deductibles of at least $2,000, according to a report from the Kaiser Family Foundation and eHealthInsurance.

Fourteen percent of health insurance buyers had deductibles greater than $3,000, the report said. The survey tracked data from 57,000 individual policies in force through the first half of 2003.

With HSAs, first authorized in January, workers with a health plan that has an individual deductible of at least $1,000 a year or a family deductible of $2,000 could set aside that amount. The limit rises to $2,600 or $5,150 a year for higher deductibles.

In the individual-insurance market, younger people are slightly more likely to have lower-deductible plans than older people, Lauer said. "What it may indicate is that younger people are getting lower-priced premiums and as such are choosing lower deductibles."

Still, the study showed that the market isn't exclusively the domain of the young and healthy, said Gary Claxton, vice president of the Kaiser Family Foundation. Nearly 12 percent of buyers were between 55 and 64, the survey said.

"There are a couple of different markets here: People who buy because they have a short-term break in coverage or those who are self-employed or retirees, where this is their only option," Claxton said. "For younger purchasers, a lot of them are gone after two years."

Almost half of users retain their policies for at least two years, and older policyholders hold their insurance longer than younger ones.

The study didn't include people who bought short-term coverage, designed for those in transition and seeking protection for three to six months.

To be sure, the vast majority of Americans still receive their medical benefits from their employers in the group health insurance market.

Across the country, an average of 70 percent of people who apply for an individual health policy for the first time are approved to get coverage, Lauer said. About 10 percent to 13 percent are denied because of health reasons.

The individual health-insurance market is difficult to track because policies' benefits and prices vary widely depending on location, age and other factors.

Unlike employer-sponsored group insurance, individual health plans are regulated by state laws and are generally less expensive overall because they cover fewer benefits, though buyers may have to pay more out of pocket to cover higher administrative and marketing costs, Claxton said.

"The premium you pay the insurer is less for nongroup coverage usually, but the benefits aren't comparable," he said.

The Kaiser Family Foundation and eHealthInsurance plan to study benefits differences.