Cost of Individual Health Insurance Policies Explodes

Published: Mon 21 Jun 2010

Lucas Eichmann

Cost of Individual Health Insurance Policies Explodes

United States health insurance companies are increasing premiums by an average of 20 percent for those between the ages of 18 and 64 who purchase their own medical plans, according to a nonprofit health care group's study released on Monday.

The rate hikes affected over three-quarters of the 14 million individuals who purchase their own health insurance plans and forced some to look for more affordable options with fewer benefits or change insurance companies completely, the Kaiser Family Foundation research found.

The discovery comes as the Obama administration cooperates with health insurers to execute a few of the new regulations under the recently enacted health care reform law, which seeks to expand Americans' coverage while targeting discriminatory practices within the health insurance industry.

Individual Coverage Woes

While individual, or nongroup, plans represent only a small portion of the medical insurance industry, they have drawn intense scrutiny lately after reports of rate hikes as high as 39 percent.

U.S. Health and Human Services Secretary Kathleen Sebelius has lambasted health insurers like WellPoint Inc for its substantial rate hikes in California and other states in the U.S.

"With people in the individual market being hit with average increases of 20 percent, 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 CEO Drew Altman explained in a statement.

Although the majority of working-age Americans who have health insurance receive it through employers, about 14 million Americans-typically owners of small businesses or those whose employers do not offer health coverage-purchase their own plans.

By contrast, 157 million Americans under age 65 have large-group or employer plans, while approximately 45 million Americans age 65 and older have health coverage through the country's Medicare program for the elderly and those with disabilities.

In addition to WellPoint, other health insurance companies include Cigna, Aetna, Health Net, Humana, UnitedHealth, Blue Cross Blue Shield, and Amerigroup.

Anticipating Reform

The Kaiser survey was performed between late March and early April. The majority of responses arrived before March 23, when the health care reform bill was signed into law by President Obama.

Several health insurance companies have already started enacting some reforms before the law takes effect, like eliminating lifetime limits on coverage and ending cancellations when a policyholder becomes ill.

However, other reforms, like safeguards for people with preexisting medical conditions, do not take effect until 2014-a gap of more than three years.