Health Care Premiums Keep Rising for Individual Payers

The number of individuals footing the bill for their own healthcare coverage rose marginally from 2002 to 2005, but the average premium paid increased 17.8 percent during that time, according to a study released recently by the Agency for Healthcare Research and Quality.

Additionally, total out-of-pocket expenses for people with individual coverage averaged a little more than 55 percent of their total health care bill, while these expenses for people with employer-sponsored group coverage averaged about 33 percent of the bill. The policies provide coverage for hospitals and physician services, according to the study, “Premiums in the Individual Health Insurance Market for Policyholders under Age 65: 2002 and 2005.”

“The individual market is the main source of health insurance for Americans who are not eligible for employer-based private insurance or public health insurance,” the study’s authors, Didem Bernard and Jessica Banthim, write in the report. “In 2005, 4.6 percent of the non-elderly population, or 12.1 million people, were covered by individual health insurance, compared with 66.8 percent who were covered by employer-based health insurance at some point during the year.”

Health care industry experts say the growing uninsured population and increases in consumer driven plans are among the primary causes health care bad debt is growing and shifting to consumers.

The make up of participants in the self-paid plans changed little from 2002 to 2005, according to the report. In both years, there were six million policyholders with self-paid coverage, with individual policy holders accounting for 70 percent of those plans and family plans accounted for 30 percent. According to the study, policyholders with individual plans saw premiums increase an average of 12 percent from $2,531 in 2002 to $2,835 in 2005. Policyholders with family coverage saw premiums increase an average of 25.3 percent during that period from $4,442 in 2002 to $5,568 in 2005.

The study also found that older policyholders paid higher premiums for coverage than younger policyholders. In 2005, the average premium for single coverage policy purchasers under 40 was $1,580. Those between 40 and 54 paid an average of $3,325 for a similar policy, and those between 55 and 64 paid an average of $4,288.

Ironically, the average cost of a policy for individual holders with single coverage under 45 dropped from $4,125 in 2002 to $3,863 in 2005. Meanwhile, policy holders between 45 and 64 saw premiums for family coverage increase from $4,707 in 2002 to $6,835 in 2005.

The study’s authors said the higher premiums for older policy holders reflect the higher cost of health care as people age. Meanwhile, the decrease in premiums for individual holders with single coverage may be a result of the introduction of high deductible Health Savings Accounts in 2004, which offered health coverage for significantly lower premiums, but required policyholders to meet minimum deductibles of at least $2,500 before the insurer covered any medical care costs.