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Private Health Insurance Hard to Get and Costly

Report finds these plans are out of the reach of most Americans

THURSDAY, Sept. 14, 2006 (HealthDay News) -- Almost nine out of every 10 Americans who seek private health insurance never buy a plan, and one in five who apply are turned down or charged more because of preexisting conditions, a new report finds.

In addition, two out of five who did buy private plans with high deductibles later discovered that some of their medical costs were not covered by their plan, according to data released Thursday by the non-profit group The Commonwealth Fund.

The report comes at a time when the number of uninsured Americans is at an all-time high. A record-setting 46.6 million Americans, or 15.9 percent, were without heath insurance in 2005, up from 45.3 million, or 15.6 percent, in 2004, according to new U.S. Census Bureau figures.

"We wanted to look at what people's experience was in the private health insurance market," said the report's lead author, Commonwealth Fund assistant vice president Sara Collins. "You really don't have much choice out of the employer-based system."

When people lose their health-care coverage, many turn to individual private insurance. But too many find private plans either unobtainable or unaffordable, Collins reported.

"Very few people who try to buy coverage in the individual market actually end up purchasing it," she said.

"In addition, people with private plans give their plans lower ratings than do people with employer-based plans," she added.

Moreover, people with high-deductible health plans, whether private or employer-based, are more likely to delay needed health care or to forego buying prescription drugs, Collins said. In addition, they often incur high medical debts, sometimes using credit cards to pay for their health care. This is particularly the case among low-income families, who are especially at risk, the report found.

"People with private plans spent a lot more of their income on health care," Collins said. In fact, 40 percent of those with deductibles over $1,000 had medical bills for services not covered by their insurance, compared with 19 percent of those with deductibles under $500.

Collin's team found that 89 percent of working-age adults who investigated coverage in the individual market during the past three years never bought a plan. Of these, 58 percent say it was difficult or impossible to find affordable coverage.

Twenty-one percent of those who did apply for a private plan said they were turned down, charged a higher price because of a pre-existing medical condition, or had a health problem that excluded them from coverage, the researchers found.

Collins said she believed that private insurance can still be a good option for people seeking health insurance.

"What we really need to do is to open new forms of group coverage for people that lose their employer-based coverage," she said. "This could include opening up the Federal Employees Health Benefits Program or expanding Medicaid or Medicare."

Without these changes, Collins said, she expects that health insurance costs will continue to rise.

"What we have to worry about is the effect this will have on people's ability to get health care they need," she said.

One expert blamed government regulation for the high cost of private insurance.

"If we are going to solve the problem of access to health care and health insurance, we must find a way to get costs under control," said Grace-Marie Turner, president of the Galen Institute, a consulting group that advocates a free-market approach to the health care industry.

Lifting government rules and regulations that drive up the cost of coverage would help millions more people to afford coverage, she said.

"Opening the health sector to true competition would provide consumers with more options for more affordable coverage," Turner said. "The answer is not more government intrusion but a competitive marketplace that will empower consumers to force insurers and health care providers to offer more choices and greater value."

One industry representative had harsh words for the new report.

"They are making this up. These are invented statistics that have no credibility," said Greg Scandlen, the founder of Consumers for Health Care Choices, a health care industry lobbying group.

"In most cases, individual coverage is affordable," he added. "It ain't cheap, but it is affordable."

More information

There's more on health insurance at Families USA.

SOURCES: Sara Collins, assistant vice president, Commonwealth Fund, New York City; Greg Scandlen, founder, Consumers for Health Care Choices, Hagerstown, Md.; Grace-Marie Turner, president, Galen Institute, Alexandria, Va.; Sept. 14, 2006, Commonwealth Fund report
Consumer News