Individual Health Insurance Premiums Decline at MedSave.com

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For the first time ever, the average cost of an individual health insurance policy issued online at MedSave.com in 2007 declined from the previous year. The change is primarily the result of increased availability of low cost health insurance options for Internet shoppers.

MedSave.com announced this week that the average cost of health insurance issued on its Web site in 2007 declined for the first time since the site's inception in 1997. After a decade of sharp health insurance price increases, it appears that consumer spending on health care may be flattening, according to MedSave.com management. MedSave.com is a leading online enrollment support service for low cost individual health insurance operating in all 50 states. Average cost data was calculated for 482 enrollments in about 35 health plans where information was readily available. The average cost of individual coverage dropped 6.4% to $74.67 per month. No data is available on family coverage. MedSave.com specializes in limited benefit low cost health insurance and does not have access to data across the entire health insurance industry.

Kim Morris, client services manager at MedSave.com, feels that there are several reasons for this change:

  • Health Savings Accounts that require high deductible insurance are growing in popularity.
  • Applicants are more willing to accept high policy deductibles regardless of HSA status.
  • Low cost limited benefit plans are now more widely available.
  • Younger applicants under age 30 may not be aware of differences in insurance coverage and tend to opt for the least expensive insurance.

These findings appear to be consistent with other national trends. A recently published report by the Kaiser Family Foundation Commission found that group health insurance premiums had risen at the slowest pace in eight years and that 2007 was the fourth consecutive year of decelerating health care inflation. It is generally believed that group insurance premiums rise more quickly than individual insurance rates because more benefits are required by more stringent state regulation. In a separate study, the same commission found that Medicaid enrollments had declined in 2007. We expect announcements in the future that the overall number of Americans without health insurance has leveled off or declined.

These findings may indicate that the push toward consumer driven health care, better consumer access to information on the Internet and the restraint of additional state regulation of individual health insurance may be working to make health insurance more affordable for a larger portion of Americans. Federal law known as HIPAA ensures that all Americans have access to health insurance but no provisions were included in this legislation to ensure that the coverage is affordable. Major medical insurance is still unaffordable to many people. Yet the numbers of uninsured Americans and Medicaid applicants both declined in 2007 for the first time in more than a decade. The rate of health care inflation slowed to its slowest pace in eight years. Part of the reason for these favorable trends is the use of new low cost health insurance plans.

The most popular health insurance plans for 2008 offer a limited level of benefits at a more affordable price. Coverage is available to most applicants without regard to medical history but some exclusionary provisions still exist. Most low cost health insurance limits the coverage for pre-existing conditions for a short period of time, but better state-sponsored insurance options are now available for those with more costly chronic medical issues who are not candidates for low cost insurance plans. While not all states have approved the new types of low cost/limited benefit insurance plans, most Americans now have more affordable choices than were available in other recent years. The greatest immediate risk is that consumers may misunderstand the new coverage provided by the low cost insurance plans, presuming these are the same as full major medical plans of past generations.

This trend may have significant implications on the 2008 Presidential election. With health care inflation and the number of uninsured Americans declining, the drive for health care reform may take a back seat to other national issues. These findings along with other industry trends and observations are published in an article titled "Affordable Health Insurance for 2008" at http://medsave.com/articles/Affordable-Health-Insurance-for-2008.htm.

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Kim Morris
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