Individual Insurance Comes With A High Price

McCainPeter Suderman, at American Spectator’s blog, has proven again that conservatives don’t understand health care. In reference to a recent Center for American Progress Action Fund report showing that Sen. John McCain’s (R-AZ) health plan will dramatically increase administrative costs in our health care system, Suderman states, “What’s going to happen is that, under McCain’s plan, more people will make the switch to the individual market, which has cheaper plans but higher administrative costs.”

“According to the numbers CAP cites in its own study, individual market plans are far less expensive than those purchased through the group/employer market,” he adds. Suderman concludes:

So the real message here is that John McCain wants to promote health insurance plans that cost less money.

Suderman is missing the point. The plans McCain wants to promote cost less because they’re worth less. As insurance guru and Georgetown University professor Karen Pollitz has said:

It’s true that the advertised prices for many individual policies in many states are eye-poppingly low. The policies often cover very little: $5,000 deductibles, four doctor visits a year, no drugs.

Studies show that plans on the individual market have lower premium costs because they offer much weaker protections than those in the group market:

Individual market policies offer weaker financial protections, despite their costs having risen by more than one third from 2001 to 2004. [Health Affairs, 2008]

Basic benefits are frequently excluded from individual plans, such as maternity, prescription drugs, and mental health — with any pre-existing conditions more often than not being permanently excluded from coverage. [Commonwealth Fund, 02/05]

In 2007, median out-of-pocket medical expenses for those with individual health insurance policies were $2,264 as compared to $973 for people with employer-based plans. [Consumer Reports, 01/08]

There are other reasons that individual market plans are cheaper. For example, the plans cherry pick the healthiest people to enroll, something that they will continue to try to do under the McCain approach.

The bottom line is that John McCain thinks that health care costs are too high because people get too much health care. That’s why, under his plan, individuals are left to fend for themselves to get the coverage they need. McCain is so driven to achieve this change that he is willing to waste roughly $20 billion more annually in paperwork to expand the individual market.