Individual Health Insurance Plays Important Role in Nation's Health Care System

WASHINGTON, Aug. 29 /PRNewswire/ -- For millions of Americans seeking

coverage, individually purchased health insurance is more accessible and

affordable, and offers broader benefits, than widely known. Most applicants

for coverage are approved without restrictions, and the benefits commonly

purchased by consumers provide substantial financial protection.

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Those are among the findings of a study examining the marketplace for

individual major medical insurance released today by America's Health

Insurance Plans (AHIP). The U.S. Census Bureau estimates more than 16 million

non-elderly Americans obtained health insurance in the non-group market in

2003, the latest year for which they have data.

"The individual market is playing a vital and increasingly important role

in our nation's health care system by providing access to coverage and

substantial financial protection for millions of Americans who purchase

insurance without employer sponsorship," said AHIP President Karen Ignagni.

Private sector health insurance plans are offering innovative products

that are attractive to individuals purchasing coverage on their own and that

address the needs of segments of the population that were previously

uninsured, she said. Ignagni added that AHIP will make the information from

the study available to policymakers considering the role of the non-group

market in addressing the needs of Americans lacking health insurance.

The new study indicates the "typical" policy purchased by consumers in the

individual health insurance market is a preferred provider organization plan

with an annual deductible close to $2,000, annual out-of-pocket limits of

about $4,000 and a lifetime maximum benefit of nearly $5 million.

But, according to AHIP, consumers purchasing individual coverage choose

from a wide array of products, ranging from traditional indemnity plans and

plans eligible for health savings accounts to coverage offered by health

maintenance organizations.

AHIP found that in 2004 the annual premium for single coverage averaged

$2,268 and the average annual premium for family coverage was $4,424. By

comparison, annual premiums for employer-sponsored health plans during 2004

averaged $3,696 for single coverage and $9,948 for family coverage.

The study indicates premiums for non-group health insurance vary

significantly from state to state, depending on a variety of factors including

demographics, consumer benefit preferences and differences in health care

costs and regulations. However, 94% of the single policies surveyed were sold

in states where the average premiums were under $3,000, and 98% of family

policies in the survey were sold in states where the average premium was under

$6,000.

Nearly every plan in the market offered -- and most people purchased -- a

prescription drug benefit, coverage for inpatient and outpatient mental health

treatment, coverage for inpatient and outpatient substance abuse, annual

visits to an obstetrician/gynecologist, well-baby care, and for complications

of pregnancy.

One measure of the financial protection provided by an insurance policy is

the limit placed on the consumer's annual out-of-pocket spending. Most

consumers picked plans with annual out-of-pocket limits under $4,000.

Another important measure of financial protection provided by the policy

is the lifetime maximum benefit. All plans had lifetime maximum benefits of

$1 million or more. Most consumers picked plans with lifetime maximums of

more than $2 million, with the average at nearly $5 million.

The study shows that, even in states that allow insurers to consider an

applicant's medical history, nearly nine out of ten people who completed the

application process for non-group insurance were offered coverage. Of those

applicants offered coverage, more than three-quarters received their requested

coverage at standard rates, while 22 percent were offered full coverage at

higher initial premiums. Only 1 percent of offers included a coverage

exception for a specified condition.

According to the study, individual coverage is being purchased by people

of all ages. However, offer rates are lower for applicants who apply later in

life. Nonetheless, 80 percent of qualified applicants between the ages of 50

and 54, and 70 percent of those aged 60 to 64, were offered coverage.

The survey asked AHIP member companies active in the individual market to

provide detailed data on the benefits provided under policies and certificates

sold during the 12 month period ending June, 2004. The survey was designed to

provide a level of detail on individual market benefits comparable to that

available for employer-sponsored benefits. It represents the most

comprehensive study of the individual market undertaken so far.