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June 18, 2007

California Health Insurance Coverage Is Becoming Less Affordable

For many Californians in the individual and small-group markets, sky-rocketing healthcare costs mean benefit drop-offs or spiking premiums, a new study says.

Some healthcare reform advocates -- including President Bush -- have suggested moving all Americans out of employer-based health insurance and into plans purchased on the individual market, arguing that more choices for consumers will lead to lower premiums.

In California, individual insurance premiums do seem to be increasing at a slower rate than small-group market premiums, according to the study appearing Thursday on the Web site of the journal Health Affairs.

But the trade-off for lower premiums is steep reductions in benefits, the study found.

Between 2003 and 2006, premiums for employees of small businesses rose 53 percent from $250 to $382, while premiums in the individual market increased only 23 percent to $259.

However, individual-market policies paid 75 percent of medical costs on average in 2003 but only 55 percent in 2006. In contrast, small-group policies retained their actuarial value, paying for roughly 83 percent of medical expenses across the period.

What's more, individual-market enrollees faced much higher cost-sharing in 2006 than their small-group-market counterparts. The average deductible in the individual market was $2,136, more than six times the size of the average small-group-market deductible of $348.

Californians, click here for affordable health insurance!

Posted by healthinsurance at June 18, 2007 12:07 PM