http://www.nationaljournal.com/njmagazine/print_friendly.php?ID=nj_20080524_9618Sat. May. 24, 2008
by Ronald Brownstein
Today, most Americans receive health insurance through large organizations (either their employer or the government). Only a small number of them (about one in 11) buy it on their own in the individual insurance market.
Almost all experts agree that the health care proposal that presumptive GOP nominee John McCain recently announced would shift that balance--perhaps substantially--toward individually purchased coverage. McCain wants to replace the tax benefit for employer-provided coverage with a personal tax credit of $2,500 for individuals and $5,000 for families. That trade would cause some companies to drop coverage, driving an unpredictable number of their workers from employer-based insurance to individually based plans. Some of the uninsured--especially young people attracted to lower-cost, stripped-down plans--might also use McCain's new tax credit to buy individual policies. On both fronts, his plan would decouple insurance and employment. Hoping to promote portability and choice, McCain would steer millions of additional Americans toward the individual insurance market.
That raises an obvious question: Could the individual market handle the load? A wide variety of experts, including some in the insurance industry, say that the answer, at least for today, is no.
For starters, the administrative costs of individual policies are at least triple those of employer-based policies. That means a worker shifting from a group policy to an individual one receives significantly less coverage for the same price, notes Kenneth Thorpe, an Emory University health policy professor. And although group policies share risk between the young and old, the healthy and sick, the cost of individually based policies varies enormously, depending on the person's health. Most important, people with prior health problems often cannot get affordable coverage--if they can get any at all. "If you are a 60-year-old woman with multiple chronic diseases, forget it," Thorpe says. "There is nowhere for you to go in the individual market."
America's Health Insurance Plans, the industry's trade association, insists that the individual market works better than Thorpe and similar critics believe. But, tellingly, even AHIP is not arguing for more reliance on individually based insurance. "We haven't advocated that," says Karen Ignagni, the group's president. AHIP has endorsed a McCain-like tax credit for the uninsured, but it opposes eliminating the tax break for employer-based coverage.
FULL story at link.