Insurers targeting the individual

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As the number of uninsured people in Colorado continues to rise — and businesses drop coverage for employees or their dependents — insurance companies are attempting to bridge the gap with individual insurance plans.
The number of people enrolled in small-group coverage is declining, said Peggy Brown, deputy commissioner of insurance for the state. But the number of people taking individual insurance policies is rising, she said.
“Two-thirds of Coloradoans get health care coverage through an employer,” she said. “But the number of uninsured is rising — about 14 to 17 percent of the population doesn’t have insurance. As premium costs rise, employers face the economic condition of not providing coverage. We’re seeing some service companies broadening their product offerings to try to offset this.”
All the major insurers in Colorado are seeing increased interest in their individual product offerings. Two companies that have launched products aimed at the individual market in recent months are Rocky Mountain Health Plans and Anthem Blue Cross and Blue Shield.
“It’s not unusual to offer individual insurance,” Brown said. “The marketplace is definitely open to it.”
Affordability is one of the major draws for the individual plans. In 2004, annual premiums for plans purchased individually averaged $2,268 for a single person and $4,424 for a family, according to America’s Health Insurance Plans, an industry trade group in Washington, D.C. That’s about half as much as the average annual premium for employer-sponsored coverage.
Humana has been offering individual insurance for four years, said company president Tod Zacharias.
“We’ve seen a growth in the self-employed population who want insurance,” he said. “That’s the biggest part of our business. If you look at the statistics, the small group coverage shrinks a percent or two each year, as employers try to cope with insurance funding. Sometimes they stop covering dependents, so that percentage of the population looks to individual coverage. That’s why we’re seeing a change. Sometimes they can save money; individual premiums are lower than group premiums.”
Rocky Mountain Health Plans said its products are targeted to people between 18 and 35 and seniors 55 and older — groups who traditionally don’t have health insurance, said Vice President Jim Swayze.
“Our Solo products have eight plans that are brand new,” he said. “We’ve designed them to act as a safety net — some of them are geared toward the uninsured and are bare-bones plans, a place to start. Others are very ‘rich’ plans that offer a wide range of coverage.”
Swayze said the company is trying to provide insurance plans that are affordable. For example, a 21-year-old man in Colorado would pay less than $1.50 a day for the basic coverage with a $10,000 deductible, $10,000 out of pocket expenses.
Despite these efforts, some people remain “uninsurable,” said Barbara Brett, executive director of Cover Colorado, a nonprofit organization that provides coverage for people who have been turned down for individual insurance.
“There’s a big difference between being uninsured and uninsurable,” Brett said. “That’s where we come in.”
Companies that offer individual insurance plans are able to ask many more questions and demand medical background and health checks, she said. Those companies frequently reject people who have pre-existing medical problems, or charge applicants higher premiums.
“Unlike with company plans, they have the ability to turn down people based on medical underwriting,” she said. “They can ask questions about history, and history of hospitalizations. Those questions are very extensive. That’s why — despite these plans — the number of uninsured is growing every day.”
Cover Colorado’s premiums often are higher than most other insurance providers, but the company has begun offering discounts. “We offer plans now, if their adjusted income is $40,000 or less, they can get a 50 percent discount,” Brett said. “For $40,000 to $50,000, they can get a 40 percent discount.”
According to a 2005 study by AHIP, only 12 percent of applicants were turned down for individual coverage nationwide. More than 95 percent of applicants under 18 were offered coverage, but only 70 percent of people between 60 and 64 were covered. Only 1 percent included a coverage exception for a specified condition.
Humana’s Zacharias admits that some people won’t qualify for individual coverage.
“The group market is a guaranteed insurance coverage,” he said. “Individual insurance might not be. But we’re trying to provide a variety of options based on income, giving people a more affordable price point.”
Many traditional insurance companies say they are “breaking the mold” of traditional health insurance by offering “unique” health plans. While Solo markets its plans to the youngest and the oldest demographic, Anthem Blue Cross and Blue Shield is focusing on what they call “young invincibles.”
“Young adults between the ages of 19 and 29 represent one of the largest and fastest-growing segments of the population without health insurance,” said Janice Parmik, director of sales develop for individual and small group business at Anthem. “Nearly one-third are uninsured,”
In order to reach this group, Anthem introduced Tonik, an online product targeting 20-somethings. The plans cover preventative needs and serious medical problems.
“We’ve seen some very strong sales in the six months or so that we’ve offered this plan,” she said. “We’re trying to let people know that there’s another option out there besides employer based coverage. These plans are very good for people working in small businesses, or people whose dependents aren’t covered.”
The Anthem plans start at $87 a month for a nonsmoking male in his 20s. Plans for females start at $96 and do not cover maternity costs.
“We sell these plans to anyone who qualifies,” Parmik said. “So older people are welcome to apply — costs will vary according to their age and medical conditions.”
All insurance companies are interested in understanding and responding to the changing market, Zacharias said.
“We’re going to update our products in 2007,” he said. “We’re looking at options that draw customers to lower premiums. Insurance can be expensive, so we’re looking at more affordable price points for customers, to bring more affordability to the market. There’s a strong need for individual products for folks who need to purchase their own insurance on their own.”