Individual health insurance better for those in poor health

Posted by Joseph Coletti at 11:27 AM

Mark Pauly and Robert Lieberthal, writing in Health Affairs, have found that individual health insurance has some advantages over group health insurance.

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We find that for people at the median health status, becoming uninsured is most likely for those with individual insurance, less likely for those with small-group insurance, and least likely for those with large-group insurance. However, for people in poor or fair health, the chances of losing coverage are much greater for people who had small-group insurance than for those who had individual insurance.

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In fact, the likelihood of going without insurance does not vary by risk for those in the individual market, although it leads to large increases for those with group coverage. Pauly and Lieberthal conclude:

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At least in the short run, leveling the tax playing field between individual and group coverage might be help with (although not solve) the problem of retaining protection for high risks, as with many others. At a minimum, some of the negative perception of individual insurance might be undeserved.

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Sounds like an argument for the Bush/McCain tax deduction idea at the federal level or tax credits at the state level.

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