Premiums for Employer-Provided Insurance Rising Faster than Directly Purchased Plans
People who buy their own health insurance experienced an average increase of 18 percent on their premiums between 2002 and 2005, according to a report issued by the U.S. Department of Health and Human Services' Agency for Healthcare Research and Quality (AHRQ).
That increase seemed modest compared with the 34 percent rise in premiums paid by people insured through their employers over the same period.
More Financial Sensitivity
Experts say consumers are more sensitive to the relatively modest premium increases in individual policies because, unlike group health insurance, the annual cost of private insurance is paid entirely out of pocket.
"When people pay their own hard-earned dollars for health insurance, they are more price-sensitive than when they get it as a health 'benefit,'" said John R. Graham, director of health care studies at the Pacific Research Institute in San Francisco.
In 2002 the average annual premium for a one-person policy bought individually was $2,531; in 2005, the cost was $2,835. The annual premium for a family policy averaged $4,442 in 2002, and by 2005 had risen to $5,568.
For people with employer-sponsored insurance, average annual premiums paid out-of-pocket rose from $1,231 to $1,655 between 2002 and 2005.
The report, released in April, found nearly 70 percent of non-employer ("direct purchase") policies were held by individuals without families.
AHRQ also reported age was a significant factor in the cost of direct-purchase insurance, with premiums averaging $1,580 for single policyholders under age 40, and $4,288 for single policyholders between the ages of 55 and 64.
Leaving Employer Coverage
The report found in 2005, 12 million people in the United States under the age of 65--less than 5 percent of that population--were covered by policies purchased in the non-employer market. In that year, 174 million Americans in the same age group--67 percent of that population--had employer-provided health coverage.
According to the most recent U.S. Census, published in August 2007, the percentage of Americans moving from employer-based to private health insurance is increasing. In 2006, 59.7 percent of private health insurance consumers were enrolled in an employer-based program, while 9.1 percent were enrolled in "individual market" health insurance.
"Despite vast human resource bureaucracies dedicated to employers buying health care for workers, workers can do a better job themselves choosing policies," said Graham.
"The U.S. government needs to end the tax prejudice that forces most working Americans into health care serfdom at their employers' determination," Graham added.
Dr. Sanjit Bagchi (email@example.com) writes from India.
For more information ...
"Premiums Rise 18 Percent for Non-Employer Health Insurance," Agency for Healthcare Research and Quality, U.S. Department of Health and Human Services; April 17, 2008: http://www.ahrq.gov/news/nn/nn041708.htm