Health coverage is becoming less affordable for Californians in both the small-group and individual insurance markets, but affordability problems are showing up in very different ways in the two markets, Jon Gabel of NORC and coauthors report in a paper published June 14 on the Health Affairs Web site (free access through June 27).

The study illustrates some of the problems in the private insurance market that have led to ambitious reform efforts in California, Massachusetts, and other states, as well as the hurdles that these efforts will have to overcome in ensuring that affordable coverage is available.

Premiums paid by employees for small-group coverage in the Golden State increased 53 percent between 2003 and 2006. Premiums for individual coverage rose only 23 percent between 2002 and 2006. However, the average actuarial value of individual coverage declined dramatically: Individual-market policies paid 75 percent of medical costs on average in 2003 but only 55 percent in 2006. In contrast, small-group policies retained their actuarial value, paying for roughly 83 percent of medical expenses across the period.