How insurance companies screw people on the individual market

From the Kaiser Family Foundation:

The analysis shows that people buying health insurance on their own in the individual market from 2004-2007 still paid 52% of their health expenses, on average, out of their own pockets. In other words, people bought insurance and paid premiums and still on average paid for about half of their health costs themselves. This compares with a much lower out-of-pocket share for employer-sponsored coverage of 30%.

This points to what has really been going on in the individual insurance market. There has recently been a great deal of focus on increases in individual insurance premiums such as the proposed Anthem increase in our home state. Such premium increases are eye-popping and greater scrutiny by regulators is appropriate. But there is another phenomenon in the non-group market even more pervasive than large premium hikes; it’s what is known in the industry as "buy-downs." When insurers inform members of large premium hikes, they commonly suggest that the increase can be mitigated (or sometimes even eliminated) by switching to a lower cost policy (which means a policy with higher deductibles and/or greater limits on benefits). Data from ehealthinsurance.com bear this out: The average deductible for family plans in the individual market increased from $2,760 in 2008 to $3,128 in 2009 -- just one year later. After years of these buy-downs, you end up with what we found in our recent analysis; insurance that, on average, pays for only about half of people's health care bills.