BOX 6-10
Barriers Faced by the Uninsured in Obtaining Private Individual Insurance—“The Three A’s”

Availability barriers

  • Individual insurance is medically underwritten in most states

Affordability barriers

  • Premium surcharges for substandard risks

  • Age rating

  • Premium subsidies are rare

Adequacy barriers

  • Preexisting condition exclusions, often permanent

  • Limited coverage for pharmaceuticals and other key benefits

  • High cost sharing

SOURCE: Pollitz (2004).

unmodified offer for coverage was made only 18 percent of the time (11 of 60 applications). The average annual premium for this hypothetical applicant was $3,912, with a range from $1,464 to $16,344 per year.

In the 1990s, states enacted individual market reforms to make coverage more available and affordable, especially for higher risk people (Williams and Fuchs, 2004). New York, for example, requires all individual-market health insurance to be sold on a guaranteed-issue, community-rated basis—which means no resident can be turned down or charged more due to their health status, age, or gender (Pollitz et al., 2001; Georgetown University Health Policy Institute, 2004). Some states have also restricted the extent to which premium rates can vary based on health status and/or age. Florida law prohibits insurers from denying coverage or imposing exclusion riders based on breast cancer if treatment ended more than 2 years prior to application. Florida does not prohibit premium rate-ups for breast cancer survivors.

More than half of the states operate high-risk insurance pools to help provide coverage to individuals with serious medical conditions who have been denied private health insurance in the individual market (Achman and Chollet, 2001; Abbe, 2005). These risk pools, however, typically do not provide coverage that is available, affordable, and adequate (Box 6-11). Relatively few people are covered by state high-risk pools; 172,000 people as of 2003 (U.S. DHHS, 2003c), representing a very small share (2 percent) of individual market participants in those states. To improve access to such coverage, the federal government for the first time provided assistance to



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