Price Cuts Help Little in Individual Insurance Market

Price subsidies have only modest effects on overall participation in the individual health insurance market,  Health Affairs reported today.

Read the study.

“A 20 percent [premium] subsidy would increase the number of subscribers in the individual market by 5-11 percent and decrease the number of uninsured people by 1-3 percent,” the researchers report. That comes from 1-2 percent more potential purchasers deciding to buy insurance and about 15 percent fewer current enrollees dropping coverage, as a result of the 20 percent subsidy.

The authors argue that attacking nonprice barriers, especially the difficulty of obtaining information, could increase individual market participation as much as, if not more than, price subsidies. “For example,” they say, “if one could reduce the perceived costs of search from the mean to the lowest twenty-fifth percentile of perceived information search costs, purchase rates would increase” by 9 percent, achieving the same impact as a 20 percent price subsidy. Getting the average cost of information search down to the level of the lowest tenth percentile would increase participation by 30 percent.

Texas is the uninsurance capital of the U.S. TMA's Healthy Vision 2010 recommends providing affordable health care coverage and an appropriate medical home to all Texas residents. Healthy Vision 2010 says:

We must reduce dramatically the mounting rolls of uninsured Texans and the unrelenting pressure they apply to government-financed health care programs, safety net hospitals and emergency rooms, private practice physicians, and employers and employees who buy health insurance. Without this crucial change, we are just tinkering at the edges. Without universal access to affordable care, none of our other treatment recommendations can achieve their true potential.

Read more from Healthy Vision 2010.

Published in: on May 2, 2006 at 1:46 pm  Leave a Comment  

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