The report offers a number of key findings including:
– Monthly premiums in the small group market are, on average, 50% higher than in the individual market.
– Insurance covered 83% of a person’s medical bills in the small group market, and 55% of those costs in the individual market.
– A person buying coverage in the individual market earning the median household income ($30,623) would have spent 16% of income for health care and coverage, compared to less than 4% of income in the small group market, where employers are likely to contribute a share of the premium and benefits are more generous.
Further Evidence of Affordability Problems
A companion piece, available as a Health Affairs Web exclusive, provides additional evidence of growing affordability problems in these two markets, albeit in different ways. Jon Gabel and co-authors find that small group premiums in California increased 53% between 2003 and 2006, while premiums for individual coverage rose only 23% between 2002 and 2006.
However, the average actuarial value of individual coverage declined dramatically. In 2003 individual market policies paid 75% of medical costs on average; that figure had dropped to 55% just three years later. In contrast, small group market policies retained their actuarial value, paying for roughly 83% of medical expenses across a similar period.