NCPA - National Center for Policy Analysis

Problems With The Individual Market For Health Insurance

July 31, 2001

About 16 million Americans are self-insured -- which means they carry their own policies without benefit of the assistance of an employer or membership in a group health plan. Even minor health complications -- such as hay fever, for example -- may be grounds for rejection of their applications for insurance. Those who are accepted for coverage may face high payments.

  • Those in the individual market tend to be people who are between jobs, those who have lost coverage through divorce or the death of a spouse, part-time workers, early retirees and those whose employers don't offer coverage.
  • Unless they are self employed, most of those with individual coverage get no tax credit for purchasing insurance.
  • Coverage becomes more difficult to obtain as patients age, because health problems increase; for example, 22 percent of those ages 55 to 64 report fair or poor health -- while only 5 percent of those ages 19 to 34 say they have health problems.

The Bush administration and some members of Congress are suggesting tax credits as a way to help Americans buy insurance. Most of the tax-credit proposals would offer about $1,000 for an individual or $2,500 for a family toward health coverage.

Stuart Butler of the Heritage Foundation says tax credits may even spur some large employers to open their group policies to non-employees -- allowing them to buy in at group rates.

Source: Julie Appleby, "Need Health Insurance? Good Luck," USA Today, July 31, 2001.


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