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Study: Premiums Increased in the Individual Market, Older Policyholders Pay More

By Miriam Straus, CQ Staff

April 25, 2008 -- The average premium for individual health insurance increased by 17.8 percent between 2002 and 2005, according to a recent study by the Agency for Healthcare Research and Quality (AHRQ).

About 12 million Americans were covered by individual health insurance in 2005, said the authors of the study. They noted that individual health, or non-group, insurance is the primary source of coverage for people who are not eligible for employer-based or public health insurance.

The researchers found that in the individual market, the average premium for family policies increased 25.3 percent over the three-year period, from $4,442 to $5,568. The authors said that the increase in average premiums for single policies was not statistically significant, and that costs are adjusted for inflation.

In both 2002 and 2007, family policies constituted 30 percent of the individual insurance market, and single policies accounted for the remaining 70 percent, the authors said.

Older policyholders in the individual market paid higher premiums, the study found. In 2005, single policyholders aged 55–64 years paid an average premium of $4,288, while their counterparts under 40 paid an average premium of $1,580.

Employer-based health insurance increased by 34.4 during the period of study, the authors said, with the average out-of-pocket premium for such coverage rose from $1,231 to $1,655.

The authors noted that the study did not control for differences in benefits between individual and employer-based coverage. "For example, percentage of total expenditures paid out of pocket is higher among people with individual coverage than people with employer-sponsored coverage," they wrote.

In 2005, 174 million Americans were covered by employer-based health insurance at some point during the year, the authors said.

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