News and Commentary

Individual Market Grows a Bit

About 17 million Americans bought nongroup health coverage directly from health insurers in 2007, according to a report issued by Mark Farrah Associates (MFA), a consulting company.

MFA found that in 2007, 229 companies offered major medical coverage to over 9 million people. MFA asserts that the individual market is emerging as a key product line for health insurers, with factors such as employer groups reducing benefits, growing unemployment, and opportunities in the group and government markets shrinking.

Health insurance offerings for individuals range from major medical to limited benefit to student and short term products.

Of insurers offering individual plans, WellPoint is the largest player, insuring about 21 percent of the market. Limited benefit plans, offered by 55 companies in states where limited plans are permitted, cover an additional 2 million people.

These products are not intended to take the place of major medical plans, but serve as an alternative when major medical is not an option. These products typically reimburse the insured by paying certain fees for services, e.g., $1,000 a day for hospital expenses or $50 for a doctor’s visit.

They often pay for certain tests and typically have very little underwriting requirements and do not exclude preexisting conditions. Many of these options are not insurance in the classic sense, but serve more as discount programs. In efforts to cut cost and still offer coverage, MFA reports that some employers are moving to this type of product as well.