Private Health Insurance in the News
The media plays an important role in consumer financial education. Yet the topic of individual health insurance continues to be largely ignored in popular publications In the few publications where it us covered, the coverage does not realistically portray the field. When writers tackle this topic there are often mistakes and misstatements. This article excerpt by Eileen Alt Powell of the Associated Press contains two examples of press coverage problems. originally published in a number of publications including NYTimes.com, Atlanta Journal-Constitution, Yahoo! Finance and Houston Chronicle in 2003.
"Every year, millions of Americans who have health insurance through employers lose it for one reason or another: They're laid off, they retire early, they head off to college. Doing without something as basic as health insurance can be risky because an unexpected illness can devastate a family's finances for years. Private policies are available, but finding them takes research and they're often more costly than company group rates."
The fact is that individual insurance is almost
always less costly than group insurance simply because it does not
provide as much coverage, particularly the state-mandated coverage
options. Yet this misconception persists in the media and public
impression. Other evidence shows that the price paid for individual
health insurance is less than half the amount paid by employers on a
cost per applicant basis. Again, the primary reason is that individual
coverage selected by individuals provides a lower level of benefits. Yet
the overall impression that individual insurance is more expensive than
group insurance simply is not true.
Ms. Powell's article continues:
""For someone who loses a job with a
large or mid-size company, the best option is often a COBRA policy, said
Alan R. Ziegler, president of the Society of Financial Service
Professionals, an organization of insurance and benefits specialists and
financial planners. COBRA, which takes its name from the Consolidated
Omnibus Budget and Reconciliation Act of 1986 that created it, allows
workers to continue their employer health care coverage after they've
been laid off or voluntarily left a job, generally for up to 18 months."
In reality, COBRA is seldom the best option as evidenced by the fact that it is selected by less than one in ten people leaving a group insurance plan. Yet here is a financial industry authority used to miscommunicate on a very important topic. While the concept that COBRA is important, it completely misses the point that for the large majority of Americans, it is not a viable option. Even among those who otherwise would wish to select coverage, most cannot afford it, so COBRA is not a viable option. We suspect that the reporter did not fully understand this important point and that perhaps the quote from the industry professional was taken out of context. Almost everyone involved in the health insurance industry is well aware of these limitations of COBRA coverage so it is not reasonable to think that that the president of a professional association would portray COBRA as "the best option.
Some people suggest that the media has a built-in bias toward health care reform and therefore against private health insurance solutions. We reject this argument as an overly simplistic. It is more likely that the media has not tapped into actual data about individual health insurance and relies instead on opinions that seems to confirm their initial hunches about problems in the market. Problems in this market certainly do exist, but the reality is that now there are more affordable health insurance options available to most people than in any time in our previous history.
Industry leaders like MedSave.com will continue to publish information and clarifications on an ongoing basis but industry sources alone are not enough to educate consumers about this important issue. We can only hope that reporters recognize the important differences between perception and reality in the private health insurance markets.