• Chart of the day: Premiums and deductibles in the non-group market

    Click to enlarge and, oddly, to see it with better colors (no idea why that’s the case).

    Much more at NIHCM. Worth a look.

    @afrakt

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    • Not sure if this was discussed in the report, but a $1,728 premium in 2005 would be $1,968 in 2011 dollars, so premiums and deductibles have gone up quite a bit faster than inflation.

      In other words, private plans in aggregate have been attempting to control costs by increasing cost sharing. That shifts costs to beneficiaries. This is risky for beneficiaries with higher medical needs. Medicare can’t change cost sharing without legislative changes (iirc) and the associated food fights. For example, MedPAC is making noise about a copayment for home health services and the industry is up in arms. Or AHRQ or some predecessor that recommended that Medicare stop paying for certain spinal fusion surgeries and then the orthopods lobbied and de-fanged AHRQ.

      Private health plans also negotiate the rates they pay for each service with providers, and Medicare sets the prices administratively. I assume that private health plans for the employed negotiate as hard as they can, but they’re mostly smaller than Medicare, so they won’t have as much bargaining power.

      And then of course private health plans have enacted some more innovative measures like disease management and pay for performance. The problem with the former is that while I’m sure it doesn’t hurt, it hasn’t made private plans as effective at cost control as Medicare (plus most commercial disease management programs are single-disease, whereas Medicare beneficiaries tend to have multiple interacting diseases). The problem with the latter is simply that nobody has done it aggressively enough to really bring costs down, and anyway I think it’s not a given that P4P alone is going to be our salvation either.

    • I am struck by two things here.

      First, it looks to me like premiums are pretty cheap! The average family policy is still less than $5,000 per year? That’s only $417 per month in premium contributions. I am paying over $12,000 as part of our group plan at my “company.” Sure, my employer claims to be paying most of that, but the research is pretty overwhelming that this comes out of worker paychecks. And yes I understand that coverages vary. But my policy is also a high deductible one, so my deductible is well above that cited above too.

      Second, I really would love to see a longer term trend. These charts seem to be suggesting that adverse selection is happening, or some other reason costs are increasing. But these years correspond to years when health reform again came a hot topic, it would seem that reforms such as PPACA would reduce the incentive for any firm to even offer non-group policies.

      Finally, are these inflation adjusted figures?

      • I think it’s very cheap and probably subject to a number of footnotes about what’s actually covered. In our experience, buying a nationally known HMO for a family in their mid-50 s the premiums are about 3X this much.

        • GingerR,
          Since I have done the research on health insurance for mid 50′s crowd, I will save you from speculation.

          1. In Ohio my plan costs $349 a month. Next year it is going up to $391 a month(12% increase). My annual premiums and deductible for 2012 are less than the numbers reported on the graph. The plan is sponsored by AARP and Aetna. It is available in many states. Except for the fact that it does not include maternity coverage, it looks like a bronze plan from a well known insurer. It even partially covers contraceptives. That is pretty funny benefit for the mid 50′s crowd!

          2. I found the plan through http://www.ehealthinsurance.com/. It has the largest selection of insurers that I can find online. Recently they published their Cost and Benefits of Individual and Family Health Insurance report for 2012, http://news.ehealthinsurance.com/pr/ehi/document/eHealth_Cost_and_Benefits_of_Individual_and_Family_Health_Insurance_2012.pdf, According to the report as long as you do not live in WA, AK, NH, NY, NJ, or MA you have a pretty good chance of acquiring health insurance for less that $5,000 per year. When I first looked at this problem in 2011 I found that ehealthinsurance.com offered 55 plans for Ohio that cost less than $600 per month. I found that the government sites, http://www.healthcare.gov/ and https://www.mahealthconnector.org/portal/site/connector, that try to provide a similar service are pretty useless for people shopping for insurance. They fail to offer either the best price or the best selection.

          3. I work for a small business and the owner explained to me several years ago that group health insurance offered to businesses costs much more than individual insurance for the same benefits. He concluded that businesses who buy group health insurance are dumb. It was a deal he could walk away from so he chose to offer a HRA to the employees. So far his analysis appears to be correct. According to the nihcm.org brief businesses that purchase group health insurance are paying $11,060 for this privilege versus $6,000 if they offered a HRA instead.

          4. As Austin explained elsewhere in this conversation, the reason he posted this chart was because the individual insurance market will undergo more changes than the group market. A Milliman study estimates that the individual insurance market premiums in Ohio will go up 55% to 85% as it tries to comply with the big dogs, community rating and guaranteed access to health insurance. Obviously contraceptive coverage and the other “footnotes” are insignificant to the insurance premiums. IMHO the longer we postpone the rate increases for the individual insurance market the greater the incentive for small and medium sized businesses to dump employees into the individual market or exchanges.

    • It is interesting that you chose to display the individual insurance market chart. Here is my favorite quote from the brief since it confirms my experience with confirming individual insurance with group plans.

      Premiums for coverage purchased in the non-group market are considerably lower than for coverage obtained through an employer and are rising at a slightly slower pace.

      • There were many good charts to choose from. Follow the link. The individual market will undergo more change than the group market in about a year.

      • True that premiums for group plans will tend to be lower than for individual. But you will see that the cumulative growth in premiums and deductibles in both markets is nearly identical.

        It’s also true that individual plans vary more greatly than group plans, but the study is aggregating all individual and all group plans.

    • It looks like the mean deductible is still pretty low. I think that to get better incentives it needs to be much higher still but at least it is moving in the right direction.

      http://un-thought.blogspot.com/2009/09/healthcare-compromise.html

    • I’d guess that the refusal to cover pre-existing conditions and the fact that many people prefer company insurance, means that the average customer of non-group insurance has far fewer expensive problems than in group insurance. If you have high blood pressure and your insurance doesn’t cover any heart-related problems as a result, what’s the point of buying a policy?

      Second, since many people in the non-group market are not wealthy, I’d assume more policies are limited in some way. Catastrophic coverage only, or don’t cover maternity.