Health insurance in the United States

In the United States, health insurance is any program that helps pay for medical expenses, whether through privately purchased insurance,

social insurance or a social welfare program funded by the government. Synonyms for this usage include "health coverage," "health care

coverage" and "health benefits."

In a more technical sense, the term is used to describe any form of insurance that provides protection against the costs of medical services.

This usage includes private insurance and social insurance programs such as Medicare, which pools resources and spreads the financial

risk associated with major medical expenses across the entire population to protect everyone, as well as social welfare programs such as

Medicaid and the State Children's Health Insurance Program, which provide assistance to people who cannot afford health coverage.

In addition to medical expense insurance, "health insurance" may also refer to insurance covering disability or long-term nursing or custodial

care needs. Different health insurance provides different levels of financial protection and the scope of coverage can vary widely, with more

than 40 percent of insured individuals reporting that their plans do not adequately meet their needs as of 2007.

The share of Americans with health insurance has been steadily declining since at least 2000. As of 2010 just under 84% of Americans had

some form of health insurance, which meant that more than 49 million people went without coverage for at least part of the year. Declining

rates of coverage and underinsurance are largely attributable to rising insurance costs and high unemployment. As the pool of people with

private health insurance has shrunk, Americans are increasingly reliant on public insurance. Public programs now cover 31% of the population

and are responsible for 44% of health care spending. Public insurance programs tend to cover more vulnerable people with greater health

care needs. Many of the reforms instituted by the Affordable Care Act of 2010 were designed to extend health care coverage to those without it.

Enrollment and the Uninsured

According to the United States Census Bureau, roughly 55% obtain insurance through an employer, while about 10% purchase it directly.

About 31% of Americans were enrolled in a public health insurance program: 14.5% (45 million – although that number has since risen to 48

million) had Medicare, 15.9% (49 million) had Medicaid, and 4.2% (13 million) had military health insurance (there is some overlap, causing

percentages to add up to more than 100%). Employers may also provide reimbursement for health insurance purchased individually by their

employees through a Defined contribution health benefits plan. Employers are allowed to pay employees cash in lieu of health insurance, but

this is uncommon as it is subject to strict IRS regulations.

Trends in private coverage

The percentage of non-elderly workers with employer-sponsored coverage has been falling, from 68% in 2000 to 61% in 2009, the latest year

for which data is available. While the primary cause of falling rates of insurance is the rising cost of health care for employers, the

economic downturn since 2008 has swelled the ranks of the uninsured, in large part because workers who lose their jobs also lose employer-

sponsored insurance. Over 1 million workers lost their health care coverage in January, February and March 2009. Approximately, 268,400

more workers lost health care coverage in March 2009 than in March 2008,[8] so the decline of employer sponsored insurance has likely

accelerated in recent years.

Industry experts expect that in the coming decade there will be a shift to defined contribution health benefits plans, similar to the recent shift in

retirement plans from defined benefit to defined contribution.

Trends in public coverage

As a smaller and smaller share of the public is covered by private insurance, public insurance has grown more essential. In 2000, 10.5% of the

public was covered by Medicaid, while 13.5% had Medicare. By 2010, those figures had risen to 14.5% and 15.9% respectively.

A report published by the Kaiser Family Foundation in April 2008 found that economic downturns dramatically increase the public's reliance on

state Medicaid and SCHIP and can cause significant financial strain for the programs. The authors estimated that a 1% increase in the

unemployment rate would increase Medicaid and SCHIP enrollment by 1 million, and increase the number uninsured by 1.1 million. State

spending on Medicaid and SCHIP would increase by $1.4 billion (total spending on these programs would increase by $3.4 billion). This

increased spending would occur at the same time state government revenues were declining. During the last downturn, the Jobs and Growth

Tax Relief Reconciliation Act of 2003 (JGTRRA) included federal assistance to states, which helped states avoid tightening their Medicaid and

SCHIP eligibility rules. The authors conclude that Congress should consider similar relief for the current economic downturn. Funding for

Medicaid and SCHIP was in fact expanded significantly under the 2010 health reform bill.

Status of the uninsured

Based on self-reported census data, in 2010, more than 49 million people in the US (more than 16% of the population) were without health

insurance as defined in the questions asked. The percentage of the non-elderly population who are uninsured has been generally increasing

since the year 2000. Among the uninsured population, some 40 million were employment-age adults (ages 18 to 64), and more than 28

million worked at least part-time. About 37% of the uninsured live in households with incomes over $50,000.

According to the Census Bureau, more than 40 million of the uninsured are US citizens. Another 9.7 million are non-citizens, but the Census

Bureau does not distinguish in its estimate between documented and undocumented migrants. It has been estimated that nearly one fifth of

the uninsured population is able to afford insurance, almost one quarter is eligible for public coverage, and the remaining 56% need financial

assistance (8.9% of all Americans). An estimated 5 million of those without health insurance are considered "uninsurable" because of pre-

existing conditions.

A 2011 study found that there were 2.1 million hospital stays for uninsured patients, accounting for 4.4 percent ($17.1 billion) of total aggregate

inpatient hospital costs in the United States. The costs of treating the uninsured must often be absorbed by providers as charity care,

passed on to the insured via cost-shifting and higher health insurance premiums, or paid by taxpayers through higher taxes.

Death

Since people who lack health insurance are unable to obtain timely medical care, they have a 40 percent higher risk of death in any given year

than those with health insurance, according to a study published in the American Journal of Public Health. The study estimated that in 2005 in

the United States, there were 45,000 deaths associated with lack of health insurance.

A Johns Hopkins Hospital study found that heart transplant complications occurred most often amongst the uninsured, and that patients who

had private health plans fared better than those covered by Medicaid or Medicare. Gallup issued a report in July 2014 stating that the

uninsured rate for adults 18 and over declined from 18% in 2013 to 13.4% by in 2014, largely due to new coverage options and market reforms

under the Affordable Care Act.[19] Rand Corporation had similar findings

Reform

The Affordable Care Act of 2010 was designed primarily to extend health coverage to those without it by expanding Medicaid, creating financial

incentives for employers to offer coverage, and requiring those without employer or public coverage to purchase insurance in newly created

state-run health insurance exchanges. The CBO has estimated that roughly 33 million who would have otherwise been uninsured will receive

coverage because of the act by 2022.

History

Accident insurance was first offered in the United States by the Franklin Health Assurance Company of Massachusetts. This firm, founded in

1850, offered insurance against injuries arising from railroad and steamboat accidents. Sixty organizations were offering accident insurance in

the US by 1866, but the industry consolidated rapidly soon thereafter. While there were earlier experiments, the origins of sickness coverage in

the US effectively date from 1890. The first employer-sponsored group disability policy was issued in 1911, but this plan's primary purpose was

replacing wages lost due to an inability to work, not medical expenses.

Before the development of medical expense insurance, patients were expected to pay all other health care costs out of their own pockets,

under what is known as the fee-for-service business model. During the middle to late 20th century, traditional disability insurance evolved into

modern health insurance programs. Today, most comprehensive private health insurance programs cover the cost of routine, preventive, and

emergency health care procedures, and also most prescription drugs, but this was not always the case. The rise of private insurance was

accompanied by the gradual expansion of public insurance programs for those who could not acquire coverage through the market.

Hospital and medical expense policies were introduced during the first half of the 20th century. During the 1920s, individual hospitals began

offering services to individuals on a pre-paid basis, eventually leading to the development of Blue Cross organizations in the 1930s. The first

employer-sponsored hospitalization plan was created by teachers in Dallas, Texas in 1929. Because the plan only covered members'

expenses at a single hospital, it is also the forerunner of today's health maintenance organizations (HMOs).

In the 1930s, The Roosevelt Administration explored possibilities for creating a national health insurance program, while it was designing the

Social Security system. But it abandoned the project because the American Medical Association (AMA) fiercely opposed it, along with all forms

of health insurance at that time.

The rise of employer-sponsored coverage

Employer-sponsored health insurance plans dramatically expanded as a direct result of wage controls imposed by the federal government

during World War II. The labor market was tight because of the increased demand for goods and decreased supply of workers during the

war. Federally imposed wage and price controls prohibited manufacturers and other employers from raising wages enough to attract workers.

When the War Labor Board declared that fringe benefits, such as sick leave and health insurance, did not count as wages for the purpose of

wage controls, employers responded with significantly increased offers of fringe benefits, especially health care coverage, to attract workers.



President Harry S. Truman proposed a system of public health insurance in his November 19, 1945, address. He envisioned a national system

that would be open to all Americans, but would remain optional. Participants would pay monthly fees into the plan, which would cover the cost

of any and all medical expenses that arose in a time of need. The government would pay for the cost of services rendered by any doctor who

chose to join the program. In addition, the insurance plan would give a cash balance to the policy holder to replace wages lost due to illness or

injury. The proposal was quite popular with the public, but it was fiercely opposed by the Chamber of Commerce, the American Hospital

Association, and the AMA, which denounced it as "socialism."

Foreseeing a long and costly political battle, many labor unions chose to campaign for employer-sponsored coverage, which they saw as a

less desirable but more achievable goal, and as coverage expanded the national insurance system lost political momentum and ultimately

failed to pass. Using health care and other fringe benefits to attract the best employees, private sector, white-collar employers nationwide

expanded the U.S. health care system. Public sector employers followed suit in an effort to compete. Between 1940 and 1960, the total number

of people enrolled in health insurance plans grew seven-fold, from 20,662,000 to 142,334,000, and by 1958, 75% of Americans had some

form of health coverage.

Medicare and Medicaid

Still, private insurance remained unaffordable or simply unavailable to many, including the poor, the unemployed, and the elderly. Before 1965,

only half of seniors had health care coverage, and they paid three times as much as younger adults, despite having lower incomes.

Consequently, interest persisted in creating public health insurance for those left out of the private marketplace.

The 1960 Kerr-Mills Act provided matching funds to states assisting patients with their medical bills. In the early 1960s, Congress rejected a

plan to subsidize private coverage for people with Social Security as unworkable, and an amendment to the Social Security Act creating a

publicly run alternative was proposed. Finally, President Lyndon B. Johnson signed the Medicare and Medicaid programs into law in 1965,

creating publicly run insurance for the elderly and the poor. Medicare was later expanded to cover people with disabilities, end-stage renal

disease, and ALS.

Towards universal coverage

Persistent lack of insurance among many working Americans continued to create pressure for a comprehensive national health insurance

system. In the early 1970s, there was fierce debate between two alternative models for universal coverage. Senator Ted Kennedy proposed a

universal single-payer system, while President Nixon countered with his own proposal based on mandates and incentives for employers to

provide coverage while expanding publicly run coverage for low-wage workers and the unemployed. Compromise was never reached, and

Nixon's resignation and a series of economic problems later in the decade diverted Congress's attention away from health reform.

Shortly after his inauguration, President Clinton offered a new proposal for a universal health insurance system. Like Nixon's plan, Clinton's

relied on mandates, both for individuals and for insurers, along with subsidies for people who could not afford insurance. The bill would have

also created "health-purchasing alliances" to pool risk among multiple businesses and large groups of individuals. The plan was staunchly

opposed by the insurance industry and employers' groups and received only mild support from liberal groups, particularly unions, which

preferred a single payer system. Ultimately it failed after the Republican takeover of Congress in 1994.

Finally achieving universal health coverage remained a top priority among Democrats, and passing a health reform bill was one of the Obama

Administration's top priorities. The Patient Protection and Affordable Care Act was similar to the Nixon and Clinton plans, mandating coverage,

penalizing employers who failed to provide it, and creating mechanisms for people to pool risk and buy insurance collectively. Earlier

versions of the bill included a publicly run insurer that could compete to cover those without employer sponsored coverage (the so-called

public option), but this was ultimately stripped to secure the support of moderates. The bill passed the Senate in December 2009 with all

Democrats voting in favor and the House in March 2010 with the support of most Democrats. Not a single Republican voted in favor of it either

time.

Public health care coverage

Public programs provide the primary source of coverage for most seniors and also low-income children and families who meet certain

eligibility requirements. The primary public programs are Medicare, a federal social insurance program for seniors (generally persons aged 65

and over) and certain disabled individuals; Medicaid, funded jointly by the federal government and states but administered at the state level,

which covers certain very low income children and their families; and SCHIP, also a federal-state partnership that serves certain children and

families who do not qualify for Medicaid but who cannot afford private coverage. Other public programs include military health benefits

provided through TRICARE and the Veterans Health Administration and benefits provided through the Indian Health Service. Some states have

additional programs for low-income individuals. In 2011, approximately 60 percent of stays were billed to Medicare and Medicaid—up from

52 percent in 1997.

Medicare

In the United States, Medicare is a federal social insurance program that provides health insurance to people over the age of 65, individuals

who become totally and permanently disabled, end stage renal disease (ESRD) patients, and people with ALS. Recent research has found that

the health trends of previously uninsured adults, especially those with chronic health problems, improves once they enter the Medicare

program. Traditional Medicare requires considerable cost-sharing, but ninety percent of Medicare enrollees have some kind of

supplemental insurance - either employer-sponsored or retiree coverage, Medicaid, or a private Medigap plan – that covers some or all of their

cost-sharing. With supplemental insurance, Medicare ensures that its enrollees have predictable, affordable health care costs regardless

of unforeseen illness or injury.

As the population covered by Medicare grows, its costs are projected to rise from slightly over 3 percent of GDP to over 6 percent, contributing

substantially to the federal budget deficit. In 2011, Medicare was the primary payer for an estimated 15.3 million inpatient stays,

representing 47.2 percent ($182.7 billion) of total aggregate inpatient hospital costs in the United States. The Affordable Care Act took

some steps to reduce Medicare spending, and various other proposals are circulating to reduce it further.

Medicare Advantage

Medicare Advantage plans expand the health insurance options for people with Medicare. Medicare Advantage was created under the

Balanced Budget Act of 1997, with the intent to better control the rapid growth in Medicare spending, as well as to provide Medicare

beneficiaries more choices. But on average, Medicare Advantage plans cost 12% more than traditional Medicare. The ACA took steps to

align payments to Medicare Advantage plans with the cost of traditional Medicare.

There is some evidence that Medicare Advantage plans select patients with low risk of incurring major medical expenses to maximize profits

at the expense of traditional Medicare.

Medicaid

Medicaid was instituted for the very poor in 1965. Since enrollees must pass a means test, Medicaid is a social welfare or social protection

program rather than a social insurance program. Despite its establishment, the percentage of US residents who lack any form of health

insurance has increased since 1994. It has been reported that the number of physicians accepting Medicaid has decreased in recent

years due to lower reimbursement rates.

The Affordable Care Act dramatically expanded Medicaid. The program will now cover everyone with incomes under 133% of the federal

poverty level who does not qualify for Medicare, provided this expansion of coverage has been accepted by the state where the person resides.

Meanwhile, Medicaid benefits must be the same as the essential benefit in the newly created state exchanges. The federal government will

fully fund the expansion of Medicaid initially, with some of the financial responsibility gradually devolving back to the states by 2020.

In 2011, there were 7.6 million hospital stays billed to Medicaid, representing 15.6% (approximately $60.2 billion) of total aggregate inpatient

hospital costs in the United States.

State Children's Health Insurance Program (SCHIP)

The State Children's Health Insurance Program (SCHIP) is a joint state/federal program to provide health insurance to children in families who

earn too much money to qualify for Medicaid, yet cannot afford to buy private insurance. The statutory authority for SCHIP is under title XXI of

the Social Security Act. SCHIP programs are run by the individual states according to requirements set by the federal Centers for Medicare and

Medicaid Services, and may be structured as independent programs separate from Medicaid (separate child health programs), as expansions

of their Medicaid programs (SCHIP Medicaid expansion programs), or combine these approaches (SCHIP combination programs). States

receive enhanced federal funds for their SCHIP programs at a rate above the regular Medicaid match.

Military health benefits

Health benefits are provided to active duty service members, retired service members and their dependents by the Department of Defense

Military Health System (MHS). The MHS consists of a direct care network of Military Treatment Facilities and a purchased care network known

as TRICARE. Additionally, veterans may also be eligible for benefits through the Veterans Health Administration.

Pre-existing Condition Insurance Plan

The Pre-existing Condition Insurance Plan, or PCIP, is a transitional program created in the Patient Protection and Affordable Care Act

(PPACA). Those eligible for PCIP are citizens of the United States or those legally residing in the U.S., who have been uninsured for the last 6

months and "have a pre-existing condition or have been denied health coverage because of their health condition." However, if one has health

insurance or is enrolled in a state high risk pool, they are not eligible for PCIP, even if that coverage does not cover their medical condition.

PCIP is run by the individual states or through the U.S. Department of Health and Human Services, which has a contract with the Government

Employees Health Association, or GEHA, to administer benefits. Both will be funded by the federal government and provide three plan options.

These options are the standard, extended, and the Health Savings Account option. PCIP only covers the individual enrollee and does not

include family members or dependents. In 2014, the Affordable Care Act provision banning discrimination based on pre-existing conditions will

be implemented and PCIP enrollees will be transitioned into new state-based health care exchanges.

Private health care coverage

Private health insurance may be purchased on a group basis (e.g., by a firm to cover its employees) or purchased by individual consumers.

Most Americans with private health insurance receive it through an employer-sponsored program. According to the United States Census

Bureau, some 60% of Americans are covered through an employer, while about 9% purchase health insurance directly. Private insurance

was billed for 12.2 million inpatient hospital stays in 2011, incurring approximately 29% ($112.5 billion) of the total aggregate inpatient hospital

costs in the United States.

The US has a joint federal and state system for regulating insurance, with the federal government ceding primary responsibility to the states

under the McCarran-Ferguson Act. States regulate the content of health insurance policies and often require coverage of specific types of

medical services or health care providers. State mandates generally do not apply to the health plans offered by large employers, due to

the preemption clause of the Employee Retirement Income Security Act.

Employer sponsored

Employer-sponsored health insurance is paid for by businesses on behalf of their employees as part of an employee benefit package. Most

private (non-government) health coverage in the US is employment-based. Nearly all large employers in America offer group health insurance

to their employees.[56] The typical large-employer PPO plan is typically more generous than either Medicare or the Federal Employees Health

Benefits Program Standard Option.

The employer typically makes a substantial contribution towards the cost of coverage. Typically, employers pay about 85% of the insurance

premium for their employees, and about 75% of the premium for their employees' dependents. The employee pays the remaining fraction of

the premium, usually with pre-tax/tax-exempt earnings. These percentages have been stable since 1999. Health benefits provided by

employers are also tax-favored: Employee contributions can be made on a pre-tax basis if the employer offers the benefits through a section

125 cafeteria plan.

Although workers are effectively paid less than they would be, because of the cost of insurance premiums to the employer, employer-sponsored

health insurance offers several benefits to workers, including economies of scale, a reduction in adverse selection pressures on the insurance

pool (premiums are lower when all employees participate rather than just the sickest), and reduced income taxes. The disadvantages

include disruptions related to changing jobs, the regressive tax effect (high-income workers benefit far more from the tax exemption for

premiums than low-income workers), and increased spending on healthcare.

Costs for employer-paid health insurance are rising rapidly: since 2001, premiums for family coverage have increased 78%, while wages have

risen 19% and inflation has risen 17%, according to a 2007 study by the Kaiser Family Foundation. Employer costs have risen noticeably

per hour worked, and vary significantly. In particular, average employer costs for health benefits vary by firm size and occupation. The cost per

hour of health benefits is generally higher for workers in higher-wage occupations, but represent a smaller percentage of payroll.[60] The

percentage of total compensation devoted to health benefits has been rising since the 1960s. Average premiums, including both the

employer and employee portions, were $4,704 for single coverage and $12,680 for family coverage in 2008.

However, in a 2007 analysis, the Employee Benefit Research Institute concluded that the availability of employment-based health benefits for

active workers in the US is stable. The "take-up rate," or percentage of eligible workers participating in employer-sponsored plans, has fallen

somewhat, but not sharply. EBRI interviewed employers for the study, and found that others might follow if a major employer discontinued

health benefits. Effective by January 1, 2014, the Patient Protection and Affordable Care Act will impose a $2000 per employee tax penalty on

employers with over 50 employees who do not offer health insurance to their full-time workers. (In 2008, over 95% of employers with at least 50

employees offered health insurance. On the other hand, public policy changes could also result in a reduction in employer support for

employment-based health benefits.

Although much more likely to offer retiree health benefits than small firms, the percentage of large firms offering these benefits fell from 66% in

1988 to 34% in 2002.

Small employer group coverage

According to a 2007 study, about 59% of employers at small firms (3-199 workers) in the US provide employee health insurance. The

percentage of small firms offering coverage has been dropping steadily since 1999. The study notes that cost remains the main reason cited

by small firms who do not offer health benefits.[66] Small firms that are new are less likely to offer coverage than ones that have been in

existence for a number of years. For example, using 2005 data for firms with fewer than 10 employees, 43% of those that had been in existence

at least 20 years offered coverage, but only 24% of those that had been in existence less than 5 years did. The volatility of offer rates from year to

year also appears to be higher for newer small businesses.

The types of coverage available to small employers are similar to those offered by large firms, but small businesses do not have the same

options for financing their benefit plans. In particular, self-funded health care (whereby an employer provides health or disability benefits to

employees with its own funds rather than contracting an insurance company[68]) is not a practical option for most small employers.[69] A

RAND Corporation study published in April 2008 found that the cost of health care coverage places a greater burden on small firms, as a

percentage of payroll, than on larger firms. A study published by the American Enterprise Institute in August 2008 examined the effect of

state benefit mandates on self-employed individuals, and found that "the larger the number of mandates in a state, the lower the probability that

a self-employed person will be a significant employment generator." Beneficiary cost sharing is, on average, higher among small firms than

large firms.

When small group plans are medically underwritten, employees are asked to provide health information about themselves and their covered

family members when they apply for coverage. When determining rates, insurance companies use the medical information on these

applications. Sometimes they will request additional information from an applicant's physician or ask the applicants for clarification.

States regulate small group premium rates, typically by placing limits on the premium variation allowable between groups (rate bands).

Insurers price to recover their costs over their entire book of small group business while abiding by state rating rules. Over time, the effect of

initial underwriting "wears off" as the cost of a group regresses towards the mean. Recent claim experience - whether better or worse than

average - is a strong predictor of future costs in the near term. But the average health status of a particular small employer group tends to

regress over time towards that of an average group. The process used to price small group coverage changes when a state enacts small

group reform laws.

Insurance brokers play a significant role in helping small employers find health insurance, particularly in more competitive markets. Average

small group commissions range from 2 percent to 8 percent of premiums. Brokers provide services beyond insurance sales, such as assisting

with employee enrollment and helping to resolve benefits issues.

College-sponsored health insurance for students

Many colleges, universities, graduate schools, professional schools and trade schools offer a school-sponsored health insurance plan. Many

schools require that you enroll in the school-sponsored plan unless you are able to show that you have comparable coverage from another

source.

Effective group health plan years beginning after September 23, 2010, if an employer-sponsored health plan allows employees' children to

enroll in coverage, then the health plan must allow employees' adult children to enroll as well as long as the adult child is not yet age 26. Some

group health insurance plans may also require that the adult child not be eligible for other group health insurance coverage, but only before

2014.

This extension of coverage will help cover one in three young adults, according to White House documents.

Federal employees health benefit plan (FEHBP)

In addition to such public plans as Medicare and Medicaid, the federal government also sponsors a health benefit plan for federal

employees—the Federal Employees Health Benefits Program (FEHBP). FEHBP provides health benefits to full-time civilian employees.

Active-duty service members, retired service members and their dependents are covered through the Department of Defense Military Health

System (MHS). FEHBP is managed by the federal Office of Personnel Management.

"Portability" of group coverage

Two federal laws address the ability of individuals with employment-based health insurance coverage to maintain coverage.

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) enables certain individuals with employer-sponsored coverage to

extend their coverage if certain "qualifying events" would otherwise cause them to lose it. Employers may require COBRA-qualified individuals

to pay the full cost of coverage, and coverage cannot be extended indefinitely. COBRA only applies to firms with 20 or more employees,

although some states also have "mini-COBRA" laws that apply to small employers.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) provides for forms of both "group-to-group" and "group-to-individual"

portability. When an individual moves from one employer's benefit plan to another's, the new plan must count coverage under the old plan

against any waiting period for pre-existing conditions, as long as there is not a break in coverage of more than 63 days between the two plans.

When certain qualified individuals lose group coverage altogether, they must be guaranteed access to some form of individual coverage. To

qualify, they must have at least 18 months of prior continuous coverage. The details of access and the price of coverage are determined on a

state-by-state basis.

Association group health insurance

Regular health insurance is sometimes available to members of associations. Associations such as the American Bar Association offer health

insurance to their members,[not in citation given] using an established insurance company to write the policies for a group plan.

Individually purchased

According to the US Census Bureau, about 9% of Americans are covered under health insurance purchased directly. The range of

products available is similar to those provided through employers. However, average out-of-pocket spending is higher in the individual market,

with higher deductibles, co-payments and other cost-sharing provisions. Major medical is the most commonly purchased form of

individual health insurance. Although a major medical health insurance policy is primarily a catastrophic plan, qualified preventive benefits are

still covered at 100% without any waiting period or copay.

In the individual market, the consumer pays the entire premium without benefit of an employer contribution.[80][82] While self-employed

individuals receive a tax deduction for their health insurance and can buy health insurance with additional tax benefits, most consumers in the

individual market do not receive any tax benefit.[83]

Premiums vary significantly by age. In states that allow individual medical plan underwriting, premiums also vary by health status.[80]

However, with the Patient Protection and Affordable Care Act, effective by 2014, all insurers will be fully prohibited from discriminating against or

charging higher rates for any individuals based on pre-existing medical conditions.

In August 2008, the Hartford Courant reported that competition was increasing in the individual health insurance market, with more insurers

entering the market, an increased variety of products, and a broader spread of prices.

Individual health insurance is primarily regulated at the state level, consistent with the McCarran-Ferguson Act. Model acts and regulations

promulgated by the National Association of Insurance Commissioners (NAIC) provide some degree of uniformity state to state. These models

do not have the force of law and have no effect unless they are adopted by a state. They are, however, used as guides by most states, and some

states adopt them with little or no change.