October 28, 2004
You don't need to tell Andy and Clare Warner about the high cost of health insurance. The couple has been paying for family health coverage since he became an independent software consultant about five years ago.
Every six months, they got a notice of another premium increase.
"The letters were coming all the time," says Clare Warner, 35, of Costa Mesa, Calif. "It was dreadful."
But when they learned last year that the premium for their family of five would jump $100 — to $700 a month and more than $13,000 a year, including the maximum family deductible — they decided they had to do something.
That something was an Internet shopping expedition. After years of working with insurance agents who were unable to lower their premiums without reducing their coverage, Clare Warner went through an online broker and found her own health insurance policy with essentially the same benefits — for half the price.
"It was the easiest thing I’ve ever done," she says.
Seeking health insurance on the Internet is a strategy more people are adopting as costs rise. For example, health insurance premiums for California workers with employer coverage grew 15.8 percent in 2003, according to a recent study by the Kaiser Family Foundation and the Health Research and Educational Trust. That was seven times the rate of inflation.
Premiums for people like the Warners, who must pay for their own coverage, are even higher, so they may have more to gain by comparison shopping on the Internet. Other potential customers include workers who lost their jobs and can’t afford the price of COBRA continuing benefits, and the roughly 15 percent of the population — about 44 million Americans — with no health insurance.
Gary Claxton, a Kaiser Family Foundation vice president, says Internet insurance brokers don’t always offer the best coverage, but they give consumers easy access to valuable information.
"This is a way where you can get information and at least look at your options," says Claxton.
Online insurance brokers aren’t fly-by-night Internet start-ups. They include:
• www.eHealthInsurance.com, which was one of the first online health insurance brokers, dating back to 1997;
• www.QuickQuote.com, which began offering online health insurance quotes in 1995 and is now owned by Dutch financial giant ING;
• www.assurant.com, which is run by Assurant, a longtime provider of short-term and student health insurance plans formerly known as Fortis Inc.
These companies also offer life insurance and, in some cases, auto or renters’ insurance.
After a slow start, consumer interest in online health insurance information has taken off. Manhattan Research, which studies technology and health-care business trends, says 10.3 million people used the Internet to research health insurance quotes or policy information in 2003, up from 2.2 million in 2001.
Bob Fahlman, chief operating officer at eHealthInsurance, has seen the growth. The Sunnyvale, Calif., company started with 2,700 customers in 1997. It now has more than 400,000 and offers a choice of 4,000 different policies from 140 different health-care insurers. The average individual policy costs $132 a month with a $1,500 deductible.
Scott Dunn sought out eHealthInsurance after he lost his full-time computer programming job last year and became a contract worker.
The reason: Paying for continued health insurance, called COBRA, through his former employer would have cost $600 a month for his family of four, he says. With a policy that he tracked down through eHealthInsurance, he’s paying $350.
"There’s a somewhat higher deductible, but the co-pay is the same," says Dunn, 34, who lives in Orange, Calif.
Although he’s not uncomfortable doing business online, Dunn says he was reassured by the fact that he could talk to an eHealthInsurance representative who explained details and technical terms. Representatives also are available to help people find insurers who cover pre-existing conditions.
Bob Hurley, eHealthInsurance’s vice president of customer relations, says that in the last year, he’s seeing more requests from workers covered by employer benefits who are looking for a separate policy for their family. He thinks it’s the result of employers who are seeking to rein in rising health insurance costs by raising employee contributions for dependents.
The Kaiser Family Foundation reported that total premiums for family coverage in California increased by almost 42 percent over the past three years, but the average worker’s share soared by nearly 70 percent.
By last year, a typical family policy cost $8,504 a year, while single coverage averaged $3,102. Of that total, the average worker contributed $2,452 for family coverage and $418 for single coverage.
Diana Houck, a San Diego legal secretary, decided to go through an online broker to find health insurance for her husband and two sons, ages 11 and 14, after her law firm began charging her $600 a month for their coverage. She now pays $117 for them for coverage with a health maintenance organization.
"It’s probably not as much coverage, but both kids and my husband are fairly healthy," says Houck, who in two years has yet to use the plan.
Before you buy
Although purchasing health insurance has become easier online, experts say people still need to be careful consumers.
Before signing up with any carrier, they should:
Check with the state to make sure the company is licensed.
Make sure you understand what’s covered — and what’s not.
Compare premiums on several Web sites, then go to the insurance company’s Web site and see what it offers.
Tracy Lyon, an insurance agent in Mission Viejo, Calif., says consumers should also talk to an independent agent.
"It doesn’t cost you anything and they may be able to find companies that aren’t available on the Web," she says.
Whatever you do, Lyon urges everyone to get some health insurance coverage because the costs of even a seemingly minor medical problem can quickly run into the thousands of dollars.
www.HealthScope.org: Sponsored by the Pacific Business Group on Health, this independent public information sites provides ratings on health plans, hospitals and medical group performance.
www.opa.ca.gov: California’s Office of the Patient Advocate provides information and ratings on HMOs.
www.AHRQ.gov: This U.S. Agency for Healthcare Research and Quality site includes a section on "Choosing and Using a Health Plan."
This site, sponsored by the Georgetown University Health Policy Institute, outlines your rights and protections in getting health insurance.