August 21, 2007
Health Insurers Target
The Individual Market
[COLOR=#666]Aetna, WellPoint, Others Roll Out Policies That Cater to People[/COLOR]
[COLOR=#666]Who Lack Employer Coverage; Stripping Out Maternity Care[/COLOR]
By
M.P. MCQUEEN
August 21, 2007; Page D1
Health insurers are targeting the two groups of people least likely to be covered by insurance at work -- young people in their 20s and 30s, and early retirees who don't yet qualify for Medicare.
Companies including
Aetna Inc. and
WellPoint Inc. have recently begun offering individual health-insurance packages tailored for young adults, the fastest-growing population of uninsured Americans. Besides basic medical coverage, the packages also often include such benefits as teeth whitening and gym-membership discounts, because insurers say many young people are especially concerned about looking good. But to keep the policies affordable --
Humana Inc. packages start at $26 a month, for example -- the plans usually have high deductibles of as much as thousands of dollars a year and strip out some coverage that could be important, such as maternity care and brand-name prescription drugs.
2
Meanwhile, Humana also recently began marketing policies for the second-fastest-growing group of the uninsured, early retirees -- ages 50 to 64 -- who because of buyouts and company cutbacks in retirement benefits are increasingly caught in the gap between stopping work and Medicare eligibility. Aetna, WellPoint and other companies say they also plan to roll out packages for older adults in coming months.
Eric Wolfson, a 32-year-old independent filmmaker in Los Angeles, says his mother bought him a policy from Blue Cross of California, a WellPoint subsidiary, because she was worried about his not having health insurance. Because of the high deductible, however, he recently had to pay $1,700 out of his own pocket to cover hospital emergency-room costs after separating his shoulder during a martial-arts workout. Still, Mr. Wolfson says he likes having the policy in case anything catastrophic happens. "It's protection for the big stuff," he says.
Insurers are expanding their insurance offerings for individuals in part because of the dwindling share of employers -- especially smaller companies -- offering health benefits in recent years. Though the new plans could meet some of the needs of a number of young and older people, they won't necessarily reach those among the roughly 45 million uninsured Americans most in need of health coverage. That's because the new plans currently are available mainly in states where looser regulations allow insurers greater leeway to cull prospective policyholders, and thus choose the healthiest people as customers.
WellPoint rolled out its Tonik policies in California two years ago and has since expanded them to six states, with five more planned soon. There are three plan designs, which the company advertises on social-networking sites such as MySpace and through event sponsorships like the US SurfOpen. The plans are known as Thrill Seeker, with a $5,000 deductible, Part-time Daredevil, with a deductible of $3,000, and Calculated Risk Taker, which has a $1,500 deductible. Rates can vary by state, ZIP Code, age and gender. In Los Angeles, a 25-year-old male or female can buy a Tonik plan with a $5,000 deductible for as little as $77 a month. A 50-year-old male or female can buy the same plan for $244 a month.
GOING IT ALONE
Insurers are touting health plans for individuals without employer-sponsored coverage.
The plans target young people early in their careers, as well as young retirees who haven't reached Medicare eligibility.
They are often cheap, but carry high deductibles and may not include some important areas of coverage.
Many of the plans encourage preventive care, but also may cap number of doctor visits per year.
In two of the states where Tonik was rolled out this year, 20% of WellPoint's new sales are coming from the plans.
Other youth-oriented policies include Simply Blue, offered by Blue Cross and Blue Shield of Minnesota, and several plans from Rocky Mountain Health Plans called "SOLO" policies. Premiums for Simply Blue plans, for example, run from about $70 a month to $150 a month for young men and women (exclusive of maternity benefits). The youth-oriented packages typically limit the number of doctor visits per year, sometimes to as few as three. They also may have a lifetime maximum payout of $1 million or $2 million.
But these types of plans also aim to encourage preventive care by including regular check-ups and dental or vision care, generic-drug coverage and routine tests like Pap smears, often without a deductible. Some plans also allow policyholders to open a tax-advantaged Health Savings Account to help offset the out-of-pocket costs.
Insurers say the new plans are selling well. Blue Cross and Blue Shield of Minnesota says it has sold between 5,000 and 10,000 Simply Blue policies since introducing the product in December.
Jon Marcus, in his 40s, a self-employed recruiter for the tech industry in San Francisco, says he has had individual health insurance for several years but switched recently to an Aetna policy because of the relatively low premiums, currently $186 a month. But with a $5,000 deductible, Mr. Marcus says, he can't afford the surgery he needs to correct sleep apnea, which interrupts breathing during sleep. "If I spent the same amount of money at a regular job, I'd have a much better insurance policy," he says.
Some regulators are critical of some of the new policies. "The Tonik program is specifically designed to create a significant profit for the insurance company," says John Garamendi, California's lieutenant governor and former insurance commissioner. "It is designed to cover everything that a 19- to 34-year-old is not going to need. That happens to be the principal childbearing age, and it doesn't cover pregnancy," he says.
A normal pregnancy and delivery costs $8,000 to $12,000, according to insurance-industry officials. Adding maternity benefits to an individual health plan can add several hundred dollars a month to the premium.
Christi Lanier-Robinson, a WellPoint spokeswoman, says: "There is a sizable portion of the population who are not interested in maternity coverage and don't want to pay for this benefit." She says that other WellPoint plans are available with maternity coverage and that more than 70% of every Tonik premium dollar goes toward medical care.
Portion of an interesting article in yesterday's Wall Street Journal. It is too long to post the entire article. You can access the entire article at the HealthDecisions.org Newsletter website
Individual Health Insurance
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