Shopping for Private Health Insurance – A Brief Primer

March 22, 2012

Purchasing medical insurance is much like purchasing a car. There is a host of factors attendant to each transaction which makes it difficult to compare plans and understand how much more or less one particular plan will cost compared to another. It can be done, but takes a bit of work and sometimes even some financial sophistication. We know the rate of low literacy in the U.S., so one questions if even those who are insured possess the best plan in terms of costs and benefits.

Insurance premiums are highly influenced by the beneficiary’s age, health status, gender, race, and geographic locale. It is rumored that some actuaries factor in the beneficiary’s credit rating. Premiums rise as dependents are added to coverage.

Insurance benefits likewise fluctuate depending upon the above variables.

There exist several types of insurance plans: point-of-service (POS), preferred provider organizations (PPOs), and health maintenance organizations (HMOs). Each differ as to the coverage offered and the overall cost. Overlapping all of these plans is COBRA.

Some of the demographic variables accounting for different premium rates include locale, age, gender, occupation, marital status, income and number of dependents. Demographics help build a “risk profile” that actuaries use to determine the insurer’s level of exposure. Men’s premiums are usually less, supposedly because women generally visit the doctor more, seek treatment for more chronic conditions, and take more medication. (Arguably, this behavior would lessen exposure to acute disease, the treatment of which is far more expensive.) Although younger persons tend to be healthier and more resistant to medical treatment, they tend to be in more accidents than their elders. Consequently, premiums generally are lower after age 25 and before 50. The type of work one does influences risk assessment: examples are an individual working in some kind of toxic environment, having a sedentary desk job, or who is required to travel frequently – especially internationally.

For example: individual health insurance policy rates for a 60-year-old single female, living in San Francisco, produce vastly different premiums, from very high deductible plans with low coinsurance to the inverse. Benefits fluctuated accordingly. One can avoid the penalty of aging and illness if covered under a group policy (usually employer-sponsored) , although insurance and medical costs overall continue to spiral. Before PPACA, if one had a chronic pre-existing condition without access to group coverage, they might be “uninsurable” – unable to obtain insurance at all unless via a subsidized high-risk pool, the costs of which were enormous and the benefits miniscule.

Many insurance companies’ plans do not provide any mental health coverage. The Mental Health Parity Act only applies to group health plans and health insurance issuers, not to individual plans. This is the case despite, or maybe because of, the fact that neuropsychiatric diseases cause more years lost to disability, illness or premature death within the U.S. and Canada, according to WHO. Indeed, suicide is the fourth leading cause of death in the United States for adults aged 18-65, surpassing other causes including diabetes, stroke, and homicide. And yet it is not covered under many individual insurance plans. Unconscionable.

Happily, PPAC will offer mental health coverage to individual as an “essential benefit.”

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3 Responses to Shopping for Private Health Insurance – A Brief Primer

  1. Kevin Knauss on March 24, 2012 at 6:44 pm

    In California health insurance premiums can not be based on gender. Consequently, the premium for a 43 year old male or female for a specific plan will be the same.

    While there are lots of variables, it all comes down to the plans that are offered to you. Determine what you want in a health insurance plan, then go get quotes. Once you have the quotes, you can start looking at the differences between the various plans.

  2. Claudia on March 31, 2012 at 6:34 am

    Thanks, Kevin. Good for California!

  3. Tawana Shatz on June 25, 2013 at 5:07 pm

    ental health describes a level of psychological well-being, or an absence of a mental disorder.From the perspective of ‘positive psychology’ or ‘holism’, mental health may include an individual’s ability to enjoy life, and create a balance between life activities and efforts to achieve psychological resilience…,..-

    Please do read this useful blog site

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