Another study that explodes BlueCross’ stunning assertion about the “affordability” of the California individual insurance market.
Bottom line: If you are 20 and never had a health issue ever, you can probably get a good deal in California. But if you are older and/or and in less-than-perfect health, California becomes less “affordable,” quickly. In New York, with guaranteed issue, access to coverage is ensured, and the standard rate for a comprehensive package may be more expensive for some, it is less expensive for others.
The study: A national study in 2001 by the Kaiser Family Foundation, authored by Karen Pollitz and Richard Sorian at Georgetown University, and Kathy Thomas, had seven hypothetical applicants, from a 24-year old waitress with hay fever, to a 36-year old with knee surgery 10 years ago, to a 48-year old breast cancer survivor, apply for insurance. They applied to 19 insurers and HMOs in eight markets, including Fresno, California.
The result: Only 10% of application were accepted as “clean” offers–35% were either rejected, and over half (53%) were offered with a premium increase or a benefit limit.
The California conclusion: Carriers in Fresno (and Indiana) had more frequent rejections and premium surcharges than insurers in other markets. On average, applicants were offered coverage only about half of the time in Fresno, compared to about two-thirds of the time in other communities. Applicants in Fresno had surcharges apply 58% of the time, compared to 25%-39% in the other markets.
So any “rate” listed for California ignores how many people are rejected, and how many get a different and higher rate, due to their age and health status.
Comparison with New York: Blue Cross also slams guaranteed issue states, including New York, for having the highest rates in the nation. As a born and bred New Yorker, I hate to break it to them–everything, including insurance, costs more in New York.
But from this study, the hypothetical consumers applied for health insurance in Albany, New York–all got coverage. They all would have been sold a standard policy at a standard rate without any exclusion riders or other coverage penalties for their health conditions. The average premium for our single applicants in Albany was $4,104 per year–only slightly higher than the average premium ($3,996 a year) quoted to many applicants in less regulated markets.
In short, costs in New York, with “guaranteed issue” and “community rating” were similar to those in unregulated states, on average (recognizing that in other states, some paid more and some paid less). But everybody had access to comprehensive coverage, which is not the case in California, despite what BlueCross says.