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Making Personal Decisions Regarding Iowa Health Insurance Coverage

One strategy consistently ignored is opting out of health insurance.

Insured Iowans have chosen to ignore professional medical advice. They have cut back on their leisure activities, and they have made sacrifices that increase their personal and familial vulnerability. What they have not done is opt out of health insurance. To acquire health insurance requires an affirmative act. Eighty-eight percent (88%) of Iowans, all of them in a voluntary coverage market, have health insurance, and among the uninsured, only 12% say they have been in good health and that health insurance is not worth paying for.

Interpretation

The desire to keep coverage in the face of yearly double-digit premium increases is not surprising in light of what Iowans say about how they would fare without health insurance. Twenty-six percent of respondents estimated that if they did not have health insurance they would spend $1,000 or more on health care in a three-month period. Annualized, this figure would be $4,000. The most recent Iowa data (2003) on average annual employee contribution towards employment-based family coverage is $2,188 ($683 for single coverage). Insurance is still perceived as a better bargain than going without and taking on the full weight of medical risk.

Health insurance buyers with a close connection to the purchasing decision are more likely to have used cost-saving strategies.

In comparing how often insured Iowans say they have used various health care cost-saving strategies, the data show that Iowans with individually purchased private coverage are more likely to have used cost saving strategies than their counterparts covered by employer-sponsored health insurance policies. Almost half of privately covered Iowans (48%) have switched to an insurance plan with higher deductibles and co-payments, compared with 25% of Iowans with employer-sponsored coverage.

Interpretation

These data suggest Iowans consciously exercise control over their health care and health insurance decisions, based on their need to control costs. Those Iowans who purchase their own health insurance have a higher degree of personal control over their health insurance buying decisions and appear more likely to match their behavior to explicit cost-savings strategies.

The power in these findings is that they show consumers can be partners in meaningful efforts to control health care expenses as part of a greater health care reform movement. For policy makers, reform advocates, and the health care establishment, these findings present tremendous opportunity for improvements and also huge potential risks to both individual and population health. In an environment where they are asked to shoulder more and more of the burden of increasing health care costs, consumers will make decisions which minimize their own up-front health care expenses. To the extent those decisions are medically sound and adequately protect against excessive medical risk, the possible future cost savings will be enormous. Left to their own devices, without adequate information from which to make reasoned decisions, insured and uninsured consumers risk making cost-based decisions that drive up individual and population health care expenses.

A largely ignored, but nonetheless troubling, issue hidden just below the surface of these findings is the potential for health insurance premium increases to unravel some of the social fabric. We see that nearly half of Iowans with employer-sponsored coverage report having tried to minimize using health insurance in an effort to keep group premium costs down. The corollary is that those insured Iowans who are in small group plans and who experience a catastrophic event leading to inevitable high medical expenses will cause future group premiums to increase. To the extent that group members attribute responsibility for increased group premiums to individual usage, the potential exists for diminished social support for those who experience catastrophic claims.