As debate continues on Capitol Hill over how to decrease the number of uninsured, health plans have been pursuing strategies to entice individuals who don't have employer-sponsored coverage to buy insurance.
According to a study released Thursday by the Center for Studying Health System Change, insurers are pursuing strategies to tap the growth potential of the individual health insurance market, including entering less-regulated markets and developing lower-cost, less-comprehensive products targeting younger, healthy consumers.
As the only source of health coverage for people without access to employer-sponsored insurance or public insurance, the individual insurance market has traditionally attracted older, sicker individuals who perceive the need for insurance more than younger, healthier people. This creates adverse selection, leading insurers to use medical underwriting – which most states allow – to either avoid people with the greatest health needs or set premiums more reflective of their expected medical use.
According to the study, funded by the Robert Wood Johnson Foundation, several recent factors have prompted insurers to recognize the growth potential of the individual market: a declining proportion of people with employer-sponsored insurance, a sizeable population of younger, healthier people forgoing insurance and the likelihood that many people receiving subsidies to buy insurance under proposed health reforms would buy individual coverage.
"The current strategies insurers are pursuing in the individual market are unlikely to meet the needs of less-than-healthy people seeking affordable, comprehensive coverage," said HSC President Paul Ginsburg, co-author of the study with HSC Health Research Analyst Elizabeth November, HSC Health Research Assistant Genna Cohen and RWJF Program Officer Brian Quinn.
"If enacted, current health reform proposals, which envision a larger role for the individual market under a sharply different regulatory framework, would likely supercede insurers' current strategies," Ginsburg said.
To examine insurers' strategies in the individual market, HSC researchers said they collected information from the 12 communities followed by HSC since 1996 – Boston, Cleveland, Greenville, S.C., Indianapolis, Lansing, Mich., Little Rock, Ark., Miami, northern New Jersey, Orange County, Calif., Phoenix, Seattle and Syracuse, N.Y.
Between August and December 2008, researchers conducted 72 interviews, including one to three insurance executives and an insurance broker in each community and a representative from each state's insurance commissioner's office. Additional interviews were conducted with representatives of state health plan associations, consumer advocacy organizations, national health plans and national associations representing the insurance industry and insurance brokers.