hospitalConsumers who must buy insurance are getting less comprehensive coverage and paying more for the insurance. That's the conclusion of a new study by The Henry J. Kaiser Family Foundation.

The foundation found this phenomenon is not only true in the individual health insurance marketplace, but also in the small business marketplace, where more employers are offering very high deductible plans. The foundation found that high deductible plans increased from 16% in 2006 to 40% in 2009.

People with individual health insurance not only pay higher premiums, but they also pay a larger share of their total medical costs. Based on the study, people who had individual insurance between 2004 and 2007 paid 52% of their health expenses. Those with employer-based coverage only paid 30% of their health expenses.
While we've seen a lot of stories about huge increases in health insurance premiums, president and CEO of the foundation, Drew Altman said in an article about the study, that's only part of the story. He wrote, "the discussion of affordability in health reform has focused mainly on premiums and not as much on the bigger picture of total out-of-pocket costs, including deductibles and cost-sharing." He does think President Obama's recent health care proposal "improves on the affordability of the Senate health care bill; both in terms of premiums and out-of-pocket costs."

What health insurers have been doing over the past few years is encouraging "buy-downs." When people complained about the high premiums, they were encouraged to take higher and higher deductibles. Kaiser found that the average deductible for family plans in the individual market increased from $2,760 in 2008 to $3,128 in 2009. Altman said if deductibles are "too high, they can be a disincentive to get care, especially for the chronically ill, and a burden on family budgets."

Just to give you an idea of what the individual marketplace charges people over 55, I'll use my quotes as an example. Since I file a Schedule C for a small business in the state of Florida, I'm eligible for insurance through the Florida small business group. I was not able to get insurance in the individual marketplace because of pre-existing conditions, which is true for most people over 50. Few of us are in perfect health by that age.

When I went into the 55+ band, I was quoted a policy with a $5,000 deductible for $1,200 per month. Had I taken that policy, I would have to pay the insurance company $14,400 in premiums plus pay the first $5,000 in medical costs for a total of $19,400 before the insurance company would pay one cent of my care. I couldn't justify that expense and joined the ranks of the uninsured. I do have a supplemental policy from AARP to help with some costs.

Clearly something needs to be done to make health care more affordable. Medical expenses were a major factor in two-thirds of all personal bankruptcies.

Families USA reported in a March 2009 report that working families faced 64.1% increases in health insurance premiums. The Robert Wood Johnson Foundation estimates that 65.7 million people will be without health insurance in 10 years. Unless better health care regulations are in place by then, who knows where health insurance premiums will be?

Lita Epstein has written more than 25 books, including "The Complete Idiot's Guide to Personal Bankruptcy."

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