Individual Insurance is Costly, Difficult to Obtain, USA Today Reports

Although it has "always" been difficult for individuals who are ill to purchase health insurance in the individual market, even applicants who do not have "serious health problems" may not be able to obtain coverage or afford available plans, USA Today reports. Patients with medical conditions are "bad financial risks" for insurers, but patients with hay fever, temporary depression, asthma and other conditions can also be rejected by health plans. A study released by the Kaiser Family Foundation in June illustrates the difficulty in obtaining coverage in the individual market by having 19 insurance companies in eight cities consider fake applications from seven people, USA Today reports. The insurers were aware that the applications were not real, but were asked to review them as if they were. Of the seven fake applicants, one had hay fever, one had a knee injury, one was a breast cancer survivor, one was "situationally depressed," one was overweight and smoked and one was HIV-positive. Another application was for family coverage for a family of four, including a boy with asthma. The study showed that the HIV-positive applicant was rejected by every company. In addition, the applicant with hay fever was rejected by 8% of the companies and offered a "substandard" plan 87% of the time; the applicant with depression was rejected 23% of the time; and the overweight smoker was rejected 55% of the time, with offers of coverage carrying annual premiums ranging from $2,928 to $30,048. Overall, the five single applicants were offered coverage with premiums that averaged $3,996 per year. As for the family of four, 80% of the policies offered placed limits on the son's asthma treatment. Larry Levitt of the Kaiser Family Foundation said, "It's an incredibly fickle market, where even someone with a health condition as mild as hay fever can find themselves rejected or with coverage priced out of their reach." He added that just shopping for insurance is difficult, as applications may take weeks to process and some insurers require payments with applications. "There are no simple solutions here," Levitt said.

Possible Solutions
The Bush administration has pushed the "controversial" idea of using tax credits to help Americans purchase individual coverage, USA Today reports. Most of the tax-based proposals would offer tax breaks of $1,000 for an individual and $2,500 for families. Critics, however, maintain that such a tax credit would be insufficient to purchase "comprehensive coverage." They also say that such a policy would encourage employers to drop coverage. Supporters, however, contend that tax breaks could allow people to buy "basic" coverage or "spur" large employers to open group policies to nonemployees. USA Today reports that some states have high-risk pools available for people who are uninsurable in the individual market, and other states have regulated the industry to "limi[t]" health plans' ability to deny coverage on the basis of a medical condition. Levitt said that the "best options" to increase coverage are creating purchasing pools and expanding programs for the uninsured. "A tax credit like that proposed by the president would work for some, but for those who have a health condition, the individual market doesn't seem to have the answers, even with a tax credit" (Appleby, USA Today, 7/31). Further information about the KFF report is available online.