The Wall Street Journal reported on a practice in the marketing of health insurance (Terhune, 2002). The background for both the practice reported in the article and the motivation for publishing the article is the health insurance situation in the United States wherein almost 50 million Americans have no health insurance and wherein that number increases annually.
In the absence of a national, universal health care program in the United States, most people depend upon their employers for health insurance for themselves and their families. The rapid increase in health care costs and, in turn, health care insurance costs, however, witnesses an increasing number of employers annually either dropping employee health insurance or increasing employee co-payments to the point where employees can no longer afford the premiums.
If employees cannot afford the premiums for employment-related group insurance, they most certainly cannot afford the much higher premiums on individual health insurance policies. Over the past 15 years, an increasing number of associations have begun offering health insurance to people otherwise priced out of the market. Associations are formed that represent a wide variety of groups that, in most cases, accept anyone as a qualifying member of the group.
These associations market their health insurance produce at reasonable rates, although they frequently charge steep initiation fees. Policy holders are happy with the situation until they make a claim. At that time, a high proportion of policy holders discover that the policies they believed provided comprehensive health care coverage actually pay on average only around half of the cost of care.
The Wall Street Journal article reports that (1) the marketing practices of the association-based health insurance policies typically fail to provide buyers with full information concerning coverage limits and exclusions and (2) the associ
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