This chart shows the total population of California (for 2010 37,253,956)and the breakdown of health insurance coverage for each of three segments of the total population (you can click on the graph to see an enlarged version).
Approximately 5.64% of California's population are covered by individual & family health insurance. 72.62% are covered under an employer plan or government program like Medicare or Medi-Cal (California Medicaid). Sadly, approximately 21.74% of the California population (based on latest media estimates) have no coverage for health care. To put it simply, 4 times as many people in California have no health insurance as have individual & family private health coverage.
As covered in Part 1 of this series (PART 1), subscriber attrition combined with continual rate increases will eventually render any individual health plan unsustainable. Add into the attrition of existing subscribers the much larger pool of non-subscribers (uninsured) and this is a recipe for disaster. Imagine a situation in California where 4 times as many drivers have no auto insurance coverage as those who do. That would create a property & casualty nightmare for auto insurers (and most would exit the state of California).
One thing I often ponder is whether or not new people from that 21.74% uninsured pool are actually even entering the health insurance system at all. For years my primary focus was on HIPAA plans moving people from employer-sponsored plans to individual coverage with pre-existing conditions. That market brings people across from the big pool of 72.62% covered under employer/government. And, since Medicare is basically automatic (Part A) for anyone who is eligible turning 65, the largest pool is self-sustaining. However, when it comes to the 5.64% currently insured by private health plans, I wonder if there is really very much in- and out-migration or if, in fact, the same pool of approximately 2.1 Million are simply being moved from plan to plan or carrier to carrier. Given that the pool of uninsured has risen by almost 2 Million since this recession began I believe it is likely that at least some percent of currently insured individuals & families were already insured either on another plan or with another health insurance carrier. It does little good in the system to simply transfer an insured from one plan/carrier to another. The objective needs to be addressing the enlargement of the individual & family pool drawing from the uninsured pool. It would be like Allstate writing auto insurance on a bunch of people who had State Farm and vice verse. The production numbers would look great but the reality is that no more people became insured than were already insured. They just became insured differently.
The focus for individual & family health insurance needs to be a combination of maintaining the existing subscribers (minimize attrition) and attracting new subscribers over from the uninsured pool. Considering that the uninsured pool in California has grown by a reported 2 Million at least, obviously that focus is not working.
We know that people on individual & family plans are generally fine with the plans and coverage so long as rates are not going up at a ridiculous rate. So the first step is to keep them happy by helping to keep their rates in check and reasonable. Stability of the existing pool is the first priority. Losing members of that pool would simply exacerbate the problem and do nothing to fix it.
As to the pool of uninsured, I will go so far as to allow 50% of that pool to fall into one of two categories:
1. Eligible for Medi-Cal or other state/county coverage but not currently enrolled;
2. Uninsurable for underwritten health insurance due to medical/pre-existing conditions
That leaves the market with about 4 Million potential health insurance subscribers who, for a variety of reasons, choose not to pay for health insurance coverage on themselves and their families.
A part of the PPACA that is currently being challenged is the mandate to have coverage. Absent a mandate or other requirement to maintain coverage, it is up to the public, independent agents and health insurance companies to devise products and programs that will attract a sizable portion of that uninsured population into the market.
It also important for independent agents to assist where ever possible in making sure that eligible individuals & families who cannot obtain private insurance or who qualify for public programs get enrolled whether it is PCIP, MRMIP, AIM, Healthy Families, Medi-Cal and so on.
In Part 3 of this series I will address some ideas and solutions I believe would go a long way towards alleviating the imbalance in the individual health market. I hope you'll stay tuned.
