Doctor Jaan at Disease Management Care Blog did an outstanding job of hosting the Health Wonk Review this week. Of the many great articles, one by Anthony Wright at Health Access Weblog caught my attention. Anthony writes about the individual health insurance market, including its current flaws and potential fixes. He writes from the point of view of a consumer advocate and community organizer. He’s not making a profit in the health insurance industry – his goal is health insurance for everyone, through the most efficient means possible, and I commend him for his efforts.
Jay and I are health insurance agents, and our focus is the individual health insurance market. I agree completely with Anthony’s point that McCain’s proposal to change tax code to favor individual health insurance policies will spell disaster for people with pre-existing conditions, unless something changes significantly in the way individual health insurance policies are underwritten and issued. The problem with simply calling for guaranteed issue policies is the premium increases that would follow. In the five states where individual health insurance is guaranteed issue, premiums are far higher than for similar policies in other states. There is a widespread misconception that group health insurance is cheaper than individual health insurance because of group bargaining power. This is simply not the case. Jay and I pay $430/month for our family’s individual health insurance policy. I have looked at similar coverage as a group policy through our corporation, and the premium would have been around $650/month to insure the same three people. This is because our individual health insurance policy was underwritten when we applied, whereas a group policy would be guaranteed issue. Of course the underwriting meant that we had to pay for Jay’s lipoma surgery ourselves, and the lack of maternity coverage on individual policies meant that we had to pay for our own prenatal care and midwife fees when our son was born. Individual health insurance policies are by no means perfect, but they are less expensive than group policies (typically employers pay a good chunk of the group premiums though).
While employer sponsored group health insurance policies are guaranteed issue and cover pre-existing conditions for HIPAA-eligible enrolees, they also tie health insurance coverage to employment, and limit the career options (including self-employment) for people with pre-existing conditions. I would rather see health insurance be independent of employment. I’d like to see coverage issued for everyone as part of the same “group” (to spread claims over the entire population), but issued on an individual basis to allow people the freedom to change jobs without losing their health insurance coverage. Subsidies could be implemented through changes in tax code rather than employer payment of premiums.
With our current disjointed system of health care and profit-driven health insurance, guaranteed issue health insurance for all Americans (with state mandates and minimum coverage requirements) will mean sky-high premiums. In order to effectively provide affordable health insurance for all Americans and genuine access to care, we must look for ways to simplify and streamline our health care and health insurance systems. Because while group health insurance is great for the employees who have access to it, the ever-increasing premiums are causing headaches for the employers. And for people who don’t have access to group health insurance, pre-existing conditions can be a major hurdle in the quest for individual health insurance in Colorado and the other 44 states that use medical underwriting.