The loneliness of individual health insurance

People who buy health insurance for themselves are in an awful place. If you can get a policy at all, the deductibles are high and the benefits skimpy. A 2008 survey found that 1 in 4 adults declined another job opportunity, stayed at a job that they would otherwise have quit or decided not to retire in order to retain their employer-sponsored health insurance.

The average out-of-pocket maximums for insurance purchased individually currently average more than $5,200. One out of 8 have no coverage for physician office visits and less than half have maternity benefits in their basic plans.

Viewed from another angle, the average employment-based health plan paid for 80 percent of all health charges in 2007, compared with 64 percent for individual plans.

These are often stopgap policies. About 11 million Americans bought individual policies in 2006, but only 7 million had them for a full year. People used them to plug coverage gaps between jobs or en route to government-insurance eligibility.

Buying individual insurance can be a harsh experience. Nearly one-half of U.S. adults under age 65 have chronic conditions that can result in policies that are more expensive — or outright rejection. One in 7 who applies for individual insurance is denied coverage because of pre-existing conditions. When consumers with pre-existing conditions find insurers who provide coverage, they are more willing to accept high prices and more reluctant to shop around. This is a clear case of market failure.

The reasons for being uninsured are voluminous . Suffice it to say that more than 20,000 uninsured people die prematurely every year because they lack timely access to care. That is a direct result of the fact that 1 out of 3 uninsured adults have chronic conditions that, if left untreated, have devastating consequences.

Health reform is expected to reduce the percentage of uninsured Americans from about 19 percent to less than 9 percent. The law is expected to insure an additional 32 million, split equally between Medicaid expansion and those buying subsidized coverage from the exchange.

The largest groups remaining uninsured will be young adults eligible for Medicaid who choose not to enroll, undocumented immigrants and adults who will be exempt from the individual mandate because they lack an affordable insurance option.