New Jersey's 1993 Reform of Individual Insurance Market Gets High Marks

From 1995 to 1999, researchers from Harvard University School of Public Health evaluated the effectiveness of New Jersey's 1993 implementation of the Individual Health Coverage Program (IHCP).

The intent of the law was to distribute policyholders and risks among all carriers in the state and make individual coverage more accessible and affordable for residents unable to purchase group health insurance coverage.

This project was part of the Robert Wood Johnson Foundation (RWJF) national program Changes in Health Care Financing and Organization (HCFO).

Key Findings

  • The research team found that:

    • A market for individual health insurance coverage for self-employed and uninsured individuals was created in New Jersey; carriers shared losses and risks, and low premiums remained available.
    • There was no evidence of adverse selection for the IHCP. In other words, IHCP enrollees were not sicker and did not have demographic characteristics that made them more expensive to cover than individuals who purchased employer group insurance or uninsured people with incomes below 250 percent of the poverty level.
    • Most IHCP enrollees comparison-shopped for their coverage, and made choices based on price, recommendations from friends or relatives, and physician/hospital participation with particular plans.
    • Most IHCP enrollees were satisfied with their coverage and said they would recommend their plan to relatives or friends.