Last week National Journal blogger Marilyn Werber Serafini wrote that “there is agreement that the market for buying health insurance as an individual doesn’t work well.” Grace-Marie Turner suggests that it’s working better than some think:
Before policymakers attempt to fix the individual health insurance market, it is important to get a clearer picture of what is actually happening in this sector where an estimated six percent of privately-insured people obtain coverage. The prevailing wisdom holds … that “there is agreement that the market for buying health insurance as an individual doesn’t work well,” and some argue that this market is hopelessly expensive and dysfunctional.
However, actual research demonstrates otherwise. Mark Pauly and Brad Herring looked not just at hypotheticals, as some surveys have done, but at actual people shopping for and purchasing insurance in the individual market. They find there is more pooling of risk in the individual market than commonly believed: “Analysis of new data…shows that actual premiums paid for individual insurance are much less than proportional to risk, and risk levels have a small effect on obtaining coverage.” They also found that the premiums that higher-risk people actually paid were only, on average, about 1.6 times those of lower-risk people.
She makes other fine points about how the tax-exemption for employer-provided insurance hurts this market, as does the prohibition of a national health insurance market, which forbids people from buying less expensive insurance available in other states. Read the whole post here.
