NCPA - National Center for Policy Analysis

Health Insurance Heats Up

October 10, 2003

Several of the nation's largest health insurers are gambling that more Americans soon will find themselves shopping for their own health insurance, or saving money in special accounts to cover medical costs.

Traditionally, most big insurers have left the individual market to smaller companies or to the Blue Cross/Blue Shield plans, except in a few states where they were required to offer such policies.

But UnitedHealth Group, the nation's largest health insurer, surprised many late last month when it reported in financial documents that it will acquire Golden Rule Financial, a private firm selling individual health policies and medical savings accounts:

  • With that move, United directly challenges Humana, which this year expanded to 13 states a major medical policy aimed at individuals.
  • Aetna, too, has gotten in the game, launching an individual policy in Pennsylvania with plans to expand to a half- dozen other states next year.

All three are aligning themselves to capitalize on expected growth in the individual market and a renewed interest in medical savings accounts. More than 16 million U.S. residents buy their own policies, or nearly 7 percent of the insured population.

That number could grow as the Bush administration promotes tax credits to help individuals buy policies, the number of uninsured rises and more employers cut off coverage for spouses or children of workers.

In addition, employers stung by rising health costs are considering offering workers a new type of insurance, which couples a high-deductible policy with a savings account. Those accounts, partly funded by the employer, are meant to soften the blow as workers pay more toward their own health care.

Source: Julie Appleby, "Insurers looking to individual market," USA Today, October 10, 2003.

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