New Statistics on the Individual Insurance Market

Published October 1, 2004

On August 2, the Kaiser Family Foundation held a briefing with eHealthInsurance on the individual market. An important new report, Update on Individual Health Insurance, was issued in conjunction with the briefing. The report provides some baseline information on the individual market so policymakers can have a point of reference–instead of just relying on impressions and anecdotes when discussing individual health insurance coverage.

The data in the report are based on actual sales made through eHealthInsurance. They include information on age of the buyers, premiums paid by age and region, retention, and cost-sharing provisions.

The report finds nearly half of individual insurance purchasers keep their policies in force for two years or more, with older buyers likely to keep them longer than younger ones do. It also finds premiums are quite affordable.

The monthly average premium is $147 for individuals, ranging from $87 for someone under 18 in the North Central region to $299 for someone over age 45 in New England. For families the monthly average is $278, ranging from $101 for an under-18 head of household to $542 for someone over age 45, both in the New England/Mid-Atlantic region.


HSAs Slow in Philadelphia?

Has the health savings account (HSA) rollout since federal approval made them available beginning on January 1 of this year been slow or speedy? Both perspectives are showing up in the press.

An early August edition of the Philadelphia Business Journal included an article titled “Companies Slow to Offer HSAs as Option.” The largely negative article by Janet Mason said HSAs “offer conflicting options for employers and employees alike.” Mason advises employers will be faced with “wading through the legislative technicalities of a complicated and expensive human resources undertaking.” She quotes an analyst with the Mercer consulting firm who says that although the plans offer a choice, “choice also means confusion.” She also quotes an Aon consultant who expresses skepticism that insurance companies will be ready to offer a product by 2005. Even the National Center for Policy Analysis is quoted in Mercer’s article, saying of HSAs, health reimbursement arrangements (HRAs), and flexible spending accounts (FSAs) that “each is imperfect in its own way.”


Article Claims Dayton Employers Dislike Consumer-Driven Plans

On the same day the Philadelphia story appeared, the Dayton Business Journal featured an article by Tracy Kershaw-Staley headlined, “Not all employers like consumer-based plan.” Kershaw-Staley cited a local company that believes “the concept will be too much of a change for employees who are used to first-dollar coverage.”

Kershaw-Staley wrote, “A new national study from researchers at the Center for Studying Health System Change (HSC) shows [this] reaction is fairly common.” She quotes HSC President Paul Ginsburg as saying, “many employers are skeptical about cost savings for their company. Some have crunched the numbers for themselves and don’t see the savings.” Another local employer is quoted as saying, “The day that I have to roll out one of these HSAs will be the day I become ashamed of my benefit package.”


HSC’s Strange Study on Consumer-Driven Health Care

The “new national study” by the Center for Studying Health System Change cited above is a curious piece of work. It was published in July 2004 but is based on interviews conducted in 2002 and 2003, some presumably before the IRS guidance on HRAs was issued on June 26, 2002; well before the HSA legislation became effective on January 1, 2004; and of course well before any of the current products were available. The study provides no statistics on the number of employers interviewed, or the number of employers who were or were not “interested.”

Yet the study concludes, as its title has it, that there is Little Interest in Consumer-Driven Health Plans and Tiered Networks. It sets up straw men such as “vendors who tout their products as single solutions to rising costs,” when neither vendors nor HSA advocates are suggesting there is any “single solution” to high and rising health care costs or any other problem in health care. If anyone is touting a “single solution,” it’s the supporters of national health insurance or state-run single-payer programs, where the government is the insurance company and health care provider.

The notion that there is “little interest” in consumer-driven health care could be easily contradicted by anyone who has attended a health care or human resources meeting in the past year. Of course, attendance and comments at such meetings do not mean every employer, or even most employers, will adopt a consumer-driven health care program. Only time and the market will determine that. But there can be no question that “many” already have, and many more will follow.


UnitedHealth Reports “Rapid Acceleration” in HSA Activity

UnitedHealth Group recently reported a “rapid acceleration in HSA sales activity across its businesses,” in a company press release. The release said, “many large employers have re-opened and re-drafted their 2005 health benefit plans so they can offer an HSA to their employees next year.” The company is forecasting 150,000 HSA enrollees in January 2005, on top of some 1.3 million individuals already using the “first-generation consumer driven products” offered by the company.

The company is working with Exante Bank to provide “a fully integrated HSA product,” according to Andy Slavitt, CEO of consumer solutions for the firm.

Source: Contact Mark Lindsay, UnitedHealth Group’s director of public communications and strategy, at 952/992-4297.

HSAs Give Consumers More Control over Medical Care, Article Reports

The Baltimore Business Journal made a similar point about the growth in demand for HSAs. On August 16, the publication forecast HSAs in Maryland may “make a splash” with consumers, but it will take “a few more years” for the products to take hold.

The article discusses the development efforts of Aetna and CareFirst BlueCross BlueShield (there aren’t very many insurance companies active in Maryland anymore) and notes, “HSAs are really part of a national movement in health care to give consumers more control over their medical care.” Cindy Ottley, spokesperson for CareFirst, is quoted as saying, “It’s a movement that’s really going to change the way health care is delivered. The goal is to create an engaged consumer instead of a passive patient.”


Wisconsin Wilders Opt for HSAs

A recent Wisconsin State Journal story profiled a family, the Wilders, who have looked at HSAs. Dr. Wilder is a chiropractor and small business owner who has been paying $1,000 a month for premiums for himself and his family. On the subject of HSAs, Wilder was quoted as saying, “Even though it’s brand new, the possibility of having more control over my health care costs is very attractive to me.” Wilder said he will cut his premium payment by 70 percent, to $300 a month, for a $5,000 deductible policy.

“Because we have a healthy family, it makes more sense to have a high deductible and bear some of the risk ourselves,” the article quotes Wilder as saying. Not stated is the fact that the Wilders will be saving $8,400 a year–more than enough to cover a $5,000 deductible and have money left over. That sounds like a good deal for less-healthy families as well.


Texas Family Chooses HSAs

A story in the August 23 issue of Newsweek likewise followed the formula of starting with an illustrative family, this time the Phillips clan of Austin, Texas. With a wife and three kids, Rich Phillips was searching for coverage after leaving his job to start his own company. He was getting quotes of $1,000 a month until he discovered an HSA policy for $350 a month. Hence his options were $1,000 a month for conventional coverage versus $350 in premium, $300 in HSA savings, and another $350 left over to spend on food, clothing, and shelter each month. The article also quotes Dan Perrin, executive director of the HSA Coalition, and mentions his Web site,, as a resource for finding an HSA plan.


Greg Scandlen ([email protected]) is director of the Galen Institute’s Center for Consumer Driven Health Care and assistant editor of Health Care News.