Individual Insurance and Access to Care

Article excerpt

Starting in 2014, more Americans will have private, nonemployment-related insurance ("individual insurance"). Using the nationally representative Medical Expenditure Panel Survey for 2002 through 2007, this' paper compares access to care between nonelderly adults with individual insurance and those with employment-related insurance. Adults with individual and employment-related insurance report similar, often good, access to care. The study employs bivariate probit models to account for omitted variables correlated with access and type of insurance, and controls for differences in health status, attitudes, and socioeconomic characteristics. Results show that individual insurance may reduce access in some dimensions, but all effects are imprecisely estimated, so that none is statistically significant.


Nonelderly people without access to employment-related insurance or public programs may seek coverage through the market for private insurance that is not associated with employers ("individual insurance"). In 2007, 10.6 million nonelderly Americans had individual insurance some time during the year (Cohen and Rhoades 2009). The Patient Protection and Affordable Care Act (ACA) is likely to increase enrollment in individual insurance by prohibiting pre-existing condition exclusions, guaranteeing availability, subsidizing premiums for families with income below 400% of the federal poverty line (FPL), assessing fees on consumers who do not obtain insurance, and creating health insurance exchanges to review insurance plans and assist consumers in selecting plans.

Currently, individual insurance tends to be less generous than employment-related insurance. While individual insurance policies vary widely in their cost-sharing provisions, deductibles and copayments for individual insurance are typically higher than those for employment-related insurance, and overall the coverage is not as generous (Bertko, Yoo, and Lemieux 2009; Collins et al. 2005; Doty et al. 2009; Gabel et al. 2007; McDevitt et al. 2010; Simantov, Schoen, and Bruegman 2001). For example, in 2007, 39% of adults with individual insurance reported deductibles of at least $1,000, compared with 11% of adults with employment-related insurance (Doty et al. 2009). Adults with individual insurance were also more likely to report their plan limited the number of doctor visits covered and the number of prescriptions or spending on medications (Doty et al. 2009). Insurers may limit generosity to avoid attracting applicants with poor health. For example, insurers may exclude coverage of pre-existing conditions, although some states limit this practice (America's Health Insurance Plans 2009; Chollet 2004; Pollitz, Sorian, and Thomas 2001). Some states permit insurers to offer limited benefit or bare-bones coverage in order to make premiums more affordable (Friedenzoh 2004; Glied et al. 2002; November et al. 2009). On the demand side, families may seek to purchase less generous coverage than is offered through employers, because individual insurance is more expensive than employer-related coverage. The loading fees for individual insurance are higher than those for employment-related insurance, and tax subsidies lower the price for employment-related insurance and individual insurance purchased by the self-employed, but not for others purchasing in the individual market. As a result of less generous benefits, people with individual insurance pay on average more out-of-pocket for their care than people with employment-related insurance (Banthin, Cunningham, and Bernard 2008). Spending on care and premiums exceeds 10% of family income for half of people with individual insurance (Banthin, Cunningham, and Bernard 2008).

These high out-of-pocket costs may inhibit access to care. On the other hand, across their product lines, insurers have the same provider networks, utilization review programs, and customer service departments, so access may be similar regardless of how insurance is purchased. …