Expanding the Individual Health Insurance Market

Lessons from the State Reforms of the 1990s

Faced with rapidly escalating premiums, fewer offers of insurance and, in some cases, a collapsing individual market, states adopted reforms designed to make coverage more affordable and available in the non-group market. This synthesis looks at the evidence of the effectiveness of state reforms. Key findings include: Comprehensive underwriting reforms, including guaranteed issue, guaranteed renewal, and limits on pre-existing conditions, did make insurance more available. In states with guaranteed issue and community rating, average premiums for the entire pool rose, while premiums fell for higher-risk people. There was some impact from adverse selection but not as much as anticipated. Risk-spreading mechanisms, but many high-risk people still could not afford insurance, so the impact from their potential influx was muted. Overall, states with comprehensive reform saw a decrease in the proportion of people insured, as healthier people left the market. There is some limited evidence that more high-risk people were covered.