The Wild West of the Individual Market

by Ross White

Ask most people to list the important birthdays of early adulthood and they would likely choose 18 (legal adulthood!), 21 (alcohol!), and 25 (lower car insurance!), but what about 26? After the last three months, I respectfully submit that turning 26 just became important for many. As you may know, a provision in the Affordable Care Act allows young adults to stay on their parents’ health insurance plan until age 26. I naturally cheered the provision when I started graduate school a year and a half ago, forfeiting employer-sponsored health insurance coverage—but it made the fall into the private insurance market an acute experience.

I started researching my insurance options in D.C. early. I had a good idea of what kind of plan I wanted: reasonable premiums and deductible, decent prescription coverage (I take daily maintenance drugs for asthma, allergies, and another well-managed chronic illness), and flexibility in provider choice. After thoroughly browsing and speaking with agents at several companies, I decided to enroll in a PPO plan from one of the largest national health insurance companies (Company A—an initial that might mean more than you think). I was given an initial quote consistent with what I could reasonably pay as a part-time employee and full-time student. As an aside, it did not make sense to enroll in insurance through my school because premiums are on a semester basis, so I’d have had to pay retroactively for months without coverage. Great! That’s settled, right?

Nope! Two days later I was contacted by an underwriter who asked more specific questions about my medical history. I gave honest answers to his questions, including the fact that I’ve had asthma since before I can remember, but noting that I have never been to the emergency room or required hospitalization as a result. In other words, I still have asthma, but it is incredibly well managed and has improved over my lifetime. The next day I received an e-mail from the company informing me that my premium quote had increased by nearly $100/month because of my preexisting conditions–and a fracture that I sustained nearly ten years ago.

There was no way I could pay such a high monthly premium, so I looked at my alternative options at the company. I decided to enroll in a plan that had a higher deductible, thereby reducing my monthly premium–although it was still higher than the original quote. I was enrolled to begin coverage on December 1. Again, I thought the issue was settled. Alas.

insureFullLess than a week after enrolling in the plan, I received a letter with the heading “Rates are changing but you have a choice.” I was informed this time that as of January 1, a new law was taking effect in DC that forbids gender discrimination in insurance rates. This would increase my premium by about $70 a year.

At this point, I was so fed up with the insurance company that I decided to look at other insurance companies. So, I filled out an application for a similar PPO plan at a competitor (Company B—again, the initial is appropriate) to see what premium they could offer me. This time, my coverage was outright denied because of my preexisting conditions.

Where does this leave me? Spend nearly a quarter of my monthly income on health insurance? Go without insurance? Negotiate? Going without just was not an option for me. To the phone to negotiate!

After spending quite some time on the phone with Company A, they agreed that it was unprofessional and unfair to raise my rate less than a week after I enrolled, especially since they anticipated the rate increase and failed to warn me. The solution: my current premium is locked in at its current rate for January and February, but will increase to the new level in March.

So, that’s where I am now—holding for dear life onto my lower premium. I am hoping to have full time employment in March, which will provide health insurance. In the meantime, I’ve been accepted for enrollment in an “open enrollment” plan at Company B. The premium is lower than the expected increased rate at Company A, so I’ll likely switch to this plan in the absence of a full-time job.

I know my experience is not that uncommon, but it highlights the importance of full implementation of ACA. While companies will still be able to vary premiums to a certain extent, they will not be able to outright deny coverage like Company B did. This protection against denial based on preexisting conditions is already in place for children and will be expanded to all adults in 2014. Some have argued that this change will destroy the insurance market, lead to adverse selection, and increase premiums across the board; but the mandate is believed to combat these effects as more people, especially the young and healthy, enroll and risks are spread over a larger insurance pool.

That’s not all that will change in 2014. If we could time warp ahead a year from now, I would also enjoy access to subsidies to purchase a plan in the DC insurance exchange. Furthermore, I would likely have access to better comparative information on insurance plans and more easily be able to make a coverage decision that is best for me. In the meantime, millions of Americans like me who do not have employer-sponsored insurance or qualify for public programs, such as Medicare, Medicaid, or CHIP, struggle to navigate the private insurance market. I have the benefit of understanding quite well the terms and structure of health insurance, but many Americans don’t fully grasp the differences between premiums, deductibles, co-pays, or co-insurance. I applaud the fact that insurance companies are now required to have simplified summaries laying out the plan details, but that alone is insufficient. Full implementation of ACA in 2014 will not solve all of the problems in the individual market, but it will begin to level the playing field, making health insurance more of an economic reality than fantasy.

_____________________________

Ross is Public Policy Associate at The Hastings Center and a graduate student in philosophy and social policy at George Washington University. Follow him on Twitter @rossswhite or subscribe to the blog.

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