A new study from America's Health Insurance Plans (AHIP) assesses the impact of prior insurance market reforms across the country. Over the past decade, numerous states have launched insurance reforms with significant yet unintended consequences.
A number of these initiatives were repealed or substantially changed within a few years of implementation.
Specifically, the report examined eight states that enacted various forms of guarantee issue and community rating in the 1990s. The states involved
in the study were Kentucky, Maine, Massachusetts, New Hampshire, New Jersey, New York, Vermont, and Washington. The report found that these initiatives can have unexpected and negative consequences for consumers and can limit access to coverage.
According to the report, guarantee issue initiatives can potentially cause individuals to wait to buy insurance until they have health problems. This could cause premiums to increase for all policyholders, increasing the likelihood of lower-risk individuals leaving the market, which could also result in further rate increases. If this continues, the pool or market could essentially collapse or shrink to include only the high-risk population.
Overall, the report found that states implementing guarantee issue and community rating saw a rise in insurance premiums, a reduction of individual insurance enrollment, and an exodus of health insurers from the individual insurance market. In addition, the report found no significant decrease in the uninsured population in states that implemented these initiatives.
