Fewer Americans Getting Health Coverage through Employers

As a follow-up to yesterday’s post about the Norvax online health insurance quoting service for individuals, a new report is out that says fewer Americans are receiving health insurance thorough their employers. In fact three million fewer Americans under the age of 65 received health insurance through employers in 2007 than in 2000, according to a report from the Economic Policy Institute in Washington.

The report, “The Erosion of Employer-Sponsored Health Insurance,” attributed the growing uninsured population across the country to declines in employer-sponsored health insurance.

According to the report, no category of worker has escaped losses in employer-sponsored health insurance since 2000, with every race, education level and work status experiencing declines.

Health Plan Innovation Take: What’s the problem with the decline in employer-sponsored health plans? Can’t these people buy a plan on their own through an agent or an online service like Norvax?

While many (young and healthy) individuals find that they can actually purchase an individual health plan for less money than they were paying for the plan offered through their employer, many are finding that they cannot purchase an individual plan at all.

Remember, group health insurance plans must be offered at the same price to all who are eligible, regardless of their age or health status. However, individual health policies are individually underwritten. This means that if you have preexisting conditions, or are obese, you will pay more for your policy than someone without these conditions – if you are offered a policy at all.

In fact, Norvax says that one out of every six online shopper is deemed “uninsurable” for standard coverage, due to either a pre-existing condition or a Body Mass Index (BMI) of 39 or higher. While these individuals could still obtain insurance, these two conditions will probably make it more difficult and more expensive.

This is a problem that will need to be solved if the trend continues, which I think it will, towards the widespread dependence on individual health policies. Unfortunately, if laws are passed to mandate guaranteed issue individual policies, as was done in Massachusetts, prices will have to increase for individual policy holders – even the healthy. Without instituting penalties for not buying insurance (again a part of the Massachusetts plan) will more individuals chose to go without coverage? They probably will.

Let’s just hope that as lawmakers get involved in this issue, that they do keep open money saving options like health savings accounts. It seems that the Massachusetts connector has now decide that minimum credible coverage for a health plan in that state must include prescription  drug coverage below the deductible, thus eliminating HSA-type plans in the state.

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