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Wednesday, March 28, 2007
Law - "Health insurance options dwindle for self-employed"
Many attorneys get their health insurance through a group plan offered via their bar association. Yesterday Lisa Girion of the LA Times had this story of interest that begins:
A major source of health insurance for people who work for themselves is disappearing, casting thousands of contractors, freelancers and solo practitioners into the ranks of the uninsured with little hope of obtaining new coverage.Health plans offered by professional associations were once havens for millions of people who couldn't get coverage anywhere else. But as medical costs have soared, groups representing professions as varied as law and golf have been forced to stop offering the benefit or been dropped by insurers.
More than 8,000 people with coverage through the California Assn. of Realtors could be next if Blue Shield of California succeeds with its plan to cancel the group's health coverage. * * *
"The association business used to be a huge part of the group health insurance business," said Robert Laszewski, a Washington-based health policy consultant and former insurance executive. "Now, it's like the buggy whip business — almost entirely gone."
Insurance carriers began pulling out of association markets about 10 years ago amid mandates requiring the groups — like employers — to offer coverage to all members who wanted to buy it, regardless of preexisting conditions. Unlike employers, however, who typically pick up the much of the premiums for employees, most associations do not share in the costs. Instead, they arrange for their members to purchase coverage at group, rather than individual, rates.
In today's marketplace, that's almost always a better deal for older members and often the only option for people with preexisting conditions. But insurers are eager to sell individual policies to the young and healthy for as little as $100 a month, scooping the cream off the risk pool. That leaves higher-risk older and less-healthy people to the group market, resulting in what is known as adverse selection.
As healthy members leave an association health plan, the concentration of members with higher-than-average medical costs increases. That forces the underwriter to raise premiums. A "death spiral" sets in, when medical costs exceed the plan's ability to raise premiums to cover them.
"The problem with associations is they go into a death spiral because they get the worst risk," said Alan Fox, vice president of plan design for the American Psychological Assn. Insurance Trust, which covered thousands of psychologists and their families for 35 years before discontinuing its health plan in 1999.
The list of casualties also includes health plans once sponsored by the American Bar Assn., which still hopes to resurrect the benefit it dropped last year, and the California Bar Assn., which lost its coverage when its insurer pulled out in the early 1990s.
Posted by Marcia Oddi on March 28, 2007 09:44 AM
Posted to General Law Related