Individual Insurance More Horrific Than Employer Plans

Consumer Reports’ investigation found that, in comparison to employer offered insurance, individual insurance sucks and it’s expensive. Here’s the results of their survey, published in the January issue, asking consumers about their experience with both types of insurance.

Individual / Employer
71% / 53% Overall complaints with coverage
55% / 81% Insurance covered most costs
52% / 29% Premium is too high
45% / 31% Postponed needed medical care because of costs
41% / 28% Deductible is too high
26% / 16% Does not adequately cover costs of doctor’s visits

Without fail, individual insurance is a much rawer deal than employer insurance, bad news for early-retiring adults, the unemployed, and the self-employed.

Comments

Edit Your Comment

  1. Ass_Cobra says:

    This should come as no shock. With employer provided insurance they insurance company has a block (your employer) to deal with. With individual, hey it’s just one guy/girl.

  2. Rando says:

    Meh, tbh with how crappy my employeers insurance program is, I’m sure I’d be better off with individual.

  3. SamTheGeek says:

    That first figure says it all “Overall complaints w/coverage- Individual:73% Employer:53%”

  4. DrGirlfriend says:

    Individual plans are sometimes close to being useless. Group plans often get a reduction in premium because of the large number of people that are in the group, and the employer can negotiate the coverage level and the restrictions/limitations. So the individual policyholder does not have the group advantage and therefore pays a high premium for lower coverage that they can’t negotiate. I work with insurance at a hospital and my jaw has dropped when I get the benefit info for some individual plans. The coverage can sometimes be so low that the entire procedure will have to be paid for out of the patient’s own pocket, because the estimate for the cost will be less than just the deductible.

  5. huadpe says:

    Also, your employer does not pay the same amount even before negotiations. There are huge tax incentives towards employer-provided health insurance. They’re paying about 15-30% less off the top before they sit down with the insurer to negotiate rates, because the whole thing is deductible.

  6. Excellent choice on the picture, Ben!

  7. lukobe says:

    CR just now found this out?

    Yeah…individual insurance is a crock. At least they’re finally going to mandate mental health coverage parity in Washington….

  8. drjayphd says:

    Clearly they haven’t seen my premiums, which are going to double next year…

  9. The Dude says:

    Before everyone starts blindly agreeing with a ‘survey,’ consider that 5 of the 6 items have to do with cost. And since most individual plans are paid by the individual, then they will tend to feel the sting more. This doesn’t make the coverage any worse or better.

    With individual high-deductible plans like I have, I pay the first $5k out of pocket. After that, they cover 100%. It’s simple to understand and I also get the negotiated pricing that my insurance has with the hospital prior to exceeding my deductible. Beyond 5k, I’m covered for 7 million.. not too bad.

    On top of that, throw in the tax savings of the first $2,800 of costs thanks to the HSA Programs, and the savings close to cover the monthly insurance cost of around $100/month so you stay at $5k including the monthly insurance cost.

    Before you go loving on your employer plan too much, consider that if you had to leave your job, you can only keep that coverage at a reasonable rate for 18 months. On individual plans like this, I believe (correct me if im wrong) that the insurer cannot raise rates or kick you out based on things that happen to you after you are in their plan. This is a big deal if you get cancer or something like that.

    This survey is comparing apples to oranges. Using your own high-deductible plan with the HSA Tax breaks is the way to go for individuals. And it sure makes you pay attention to your own health a lot more.

  10. gingerCE says:

    I don’t know why all the self-employed people in California who filed a schedule C can’t get together and form one huge group in order to get insurance at much cheaper rates. I know people who are self-employed who are paying an arm and a leg for their insurance–oh, and they’re in their 20s-early 30s. They had the bad luck of loving their jobs because they are self-employed but being born with a genetic condition such as asthma.

  11. gingerCE says:

    Yes, they can raise your rates–you’re locked into the initial rate for a year. They just can’t dump you. That was when I had to pay out of pocket for my own insurance. And the rates are lies. I got an advertisement for Kaiser that based on my age (I was 24 at the time) I could get rates as low as $60 a month. Ha! I applied and signed up and the rate I was paying was $300 a month and I had zero health problems. They are such scammers. My sis, asthma, age 21, quoted nearly $600 a month. This was the rates for the HMO plan.

  12. tallladude says:

    Individual plans/rates suck for another big reason…

    Those who often subscribe to such plans tend to be those most in need/utilize these plans.

    Think about it… a big company with several thousand employees provides coverage under a health plan… the actuarials will indicate most are healthy and will incur low/moderate usage of benefits, a small percentage will be the ones with conditions with high cost treatments.

    But on the individual level… when you must bear the brunt of 100% of the premiums, those with little/no medical conditions will likely forego paying for coverage. Afterall, if you’re 20-something, never see a doctor, never have issues– why pay $200 up for coverage that you likely won’t use? Those with conditions that’ll incur high medical costs will seek out coverage, no matter what the cost (knowing that their expenses will often greatly exceed premiums). It’s easy to see why insurers need to greatly hike those rates.

    No, I’m not in the insurance industry at all… i’m a software guy who’s been independent as well as worked for employers. I’ve worked on applications that do some of the number crunching, so I’ve seen where both sides are coming from. The answer lies in spreading out those with no coverage over a great populus, whatever that might be.

  13. FredTheCat says:

    I think I’ve found the best possible insurance coverage…my wife is an employee of Kaiser Permanente here in Southern California. A few months ago I had the misfortune of suffering a heart attack here at my desk and spent three days in the hospital after undergoing an angioplasty and stent placement. Kaiser sends us copies of the bills paid on our behalf and they total well over $100,000. Total out-of-pocket cost to us? About $60 in co-pays. It’s UNbelievable.

    Every prescription my wife, my kids, or I require costs us $5…yes, even the $640 bottle of Plavix…$5. Same with doctor visits. My youngest had her tonsils removed a few years ago. For $10.

    If you want the best insurance plan ever, you or yours should consider joining the Kaiser Permanente family.

  14. ceejeemcbeegee is not here says:

    @The Dude: Word. Most people with employer plans have those premiums deducted from their wages in some way, shape or form, so the very idea that employees aren’t paying for their benefits is a complete misnomer.

  15. Rusted says:

    Being self-employed, yeah, it sucks. No way around it though. I’m beginning to think that health insurance is pretty useless except for the insurance companies.

  16. alice_bunnie says:

    @FredTheCat:

    That’s because your wife works for them! Some of the worst abuse stories I’ve ever heard from are from Kaiser in California, and I live in Georgia.

    And, if you’re an individual, good luck if you aren’t in top prime health trying to get into anything resembling a decent price plan with any company if you’re trying to get an individual plan. I was slighly overweight (20lbs) my husband was underweight and had mitral valve prolapse (essentially nothing) we were outright denied coverage for Kaiser, me for being over weight, him for being underweight and having a heart condition.

  17. CaptainSemantics says:

    @alice_bunnie: I’m with Alice on this one. I’ve been looking at the Kaiser individual plans and I’m wondering why people even get these plans. I guess I’ve been too spoiled by company plans.

    Heck, maybe I should just suck it up and start working for Kaiser. Then I’ll get great benefits!

  18. Saboth says:

    Actually, I went out on my own from my employer insurance. A small, 250 person company that makes about 20 million a year. Why? Because they have had the same insurance plan for years and it goes up yearly.

    Basically the insurance is around $170 a month and has a $2000 yearly deductable.

    I went out on my own and got dental AND medical through Anthem, and my insurance is around $100 a month with a $500 yearly deductable. Basically the same coverage.

  19. theblackdog says:

    I could have told them that three years ago. I applied for individual health insurance from BC/BS in New Mexico when I had turned 22 since I was now off of my parent’s insurance plan. Since I had an incident of kidney stones a few months prior to that, when they sent me the paperwork to sign up, they included an exception clause that if I were to have any issues with my kidneys, they would not pay a dime.

    I didn’t sign the paperwork, and when they called later to ask why I never sent it back, I told them about the exception clause, and then they tell me I could have appealed it. Since they didn’t mention an appeals process in the paperwork, I took that as a red flag and still declined to sign.

    Now I’m under a group plan with my employer, and it’s so much easier.

  20. phrygian says:

    I was just talking to my parents about this issue the other day. They were under the impression that individual plans were just as good as ones you’d get through your job.

    When my husband and I were first married we didn’t have insurance through our jobs, so we bought it ourselves (trying to be responsible adults) — Blue Cross/Blue Shield of Louisiana. First, I was unable to find a doctor who would take a BCBS new patient until I’d called at least 20. The doctor I did end up with did want to “waste” time performing tests to diagnose my stabbing abdominal pains and enrolled me in a medication trial instead. Because he was gaming what BCBS would pay him for. Meanwhile, I was paying the monthly fees, $35 co-pays and had a huge deductible.

    What even more insulting was BCBS’s clause stating that I needed to provide 1 year’s notice before getting pregnant, in order to be switched to a (more expensive) plan that would cover neonatal and delivery expenses. If I got pregnant accidentally, then I would be responsible for any pregnancy costs until after the birth. –Oh, and the plan didn’t cover any prescriptions or birth control.

    I feel like my husband and I wasted a lot of money. We could have just gone without insurance and done a combination of out-of-pocket and state services and spent about as much as we did self-insuring.

  21. ExGC says:

    @The Dude: Absolutely right. My HSA plan suits me just fine. I imagine that some portion of the margin is also the result of having to deal with any issues personally, rather than having someone at your employer’s HR department intercede.

  22. anns says:

    Individual / Employer
    52% / 29% Premium is too high

    No kidding. Isn’t this because when you’re covered by an employer plan, you’re usually only paying 10-20, maybe 30% of the premium yourself?

    I don’t think my premium is too high, but I would if I had to pay everything my employer is paying.

  23. Elviswasntmyhero says:

    “I strongly support universal, single-payer, government-provided – or, government-funded – healthcare. It doesn’t mean the government runs it, it has competition among the different providers. But I just think that we’ve long since reached the stage that its immoral to put people in a situation where they cannot get the medical care they need because their incomes aren’t high enough. I think it ought to be a matter of right and our current system just doesn’t work, its way too expensive. The quality of healthcare is excellent for those who have enough money to buy the very best, but lower-income and low middle-income Americans are not getting good healthcare and so many now can’t afford the private health insurance that they’re going without insurance, millions and millions of people. And I think that to eliminate the incredibly ridiculous cost of all this unnecessary paperwork and different standards for different companies, it is time to have universal health insurance.”

    –Al Gore

    http://www.SICKOcure.org

  24. nardo218 says:

    @tallladude: Except for all those people who pay $100 for medical insurance “in case something happens.” S’called being financially responsible.

  25. MellowCat says:

    It has less to do with the cost as it does with government oversight. Laws that regulate the insurance companies rarely apply to individual policies or self-funded policies; they generally only apply to fully-funded group plans. If you have a policy that excuses your insurance company from conducting business ethically, then they will not hesitate to take advantage of that, as the report makes glaringly clear.