The 2.5 million Californians who buy their own health insurance must pay top dollar for coverage and face a daunting task in comparing health plan options to determine their costs and benefits. Unlike those covered through employers, these Californians can be denied coverage, offered only limited coverage, or charged more based on their medical history.

This report is the second in the California HealthCare Foundation's series Facts and Findings for Policymakers. It describes the barriers to obtaining individual coverage and points to issues for policymakers to consider in making the market more consumer-friendly. Key findings include:

• Individuals face higher premiums and more cost sharing than their employer-covered counterparts, for less comprehensive coverage. They often must choose among more than 100 product variations and may be unable to discern total out-of-pocket costs in the event of serious illness.
• Insurers set individual policy premiums without regulatory review. They can use medical questionnaires to deny coverage and risk-based pricing to set higher premiums for individuals with even minor health conditions.
• Individual purchasers are ensured continuing coverage if they can afford to shoulder the premiums, but cannot easily switch plans, especially if their health circumstances change.
• Policymakers and regulators might consider setting boundaries for medical underwriting, requiring disclosures and comparative information that support informed purchasing, and allowing long-time purchasers to move more freely among the carriers participating in the individual market.

As economic pressures cause more individuals and families to seek health care coverage outside the employer group market, the problems related to complexity and transparency in the individual market will affect a greater portion of California's population.

The complete report is available under Document Downloads.