Recent Empirical Studies of the Effects of State Health Insurance Reform

• Guaranteed issue (GI)
• Guaranteed renewal (GR)
• Preexisting condition exclusion (PreX) limits
• Prohibited rate factors
• Limits on rating
• HIPC

• Employer familiarity with reforms was moderate (56-57 percent of firms; 59-62 percent of firms offering insurance); 24 percent were aware of HIPC.
• High growth in insurance offer among firms with 3-9 employees (significant at 0.01) was probably related to reforms. No change among larger firms; no impact on median premium.
• Increase in managed care relative to indemnity insurance was potentially due to reforms.
• Decline in highest premiums paid for coverage was likely due to reforms (note: data included no control for plan design).

• Pure community rating
• GI

• NY’s small-group market reforms were not associated w/ decreased coverage relative to PA or CT, states that did not have community rating laws.
• Reforms altered structure of the small group market, increasing managed care penetration relative to PA and CT.

• Uninsured rate grew faster or declined less in reform states between 1990 and 1996
• Employer-based coverage declined in reform states, but grew slightly in nonreform states.
• Individual coverage declined faster in reform states than in nonreform states.
• Medicaid coverage grew faster in reform states than in nonreform states.

• Number of mandates
• Mandate waiver
• Employer tax credit
• MSAs
• High risk pool
• Mandatory, voluntary reinsurance
• Purchasing alliances
• GI, GR (all products, some products)
• PreX limitations
• Rate limits (for health status, age, gender)

• Greater number of mandates reduced private coverage, and group coverage in particular.
• Small-group community rating raised the likelihood of group coverage among persons over age 55
• Individual community rating reduced the likelihood of any private coverage
• Limits on individual PreX increased likelihood of any coverage (public or private) among single persons.

• Small group access reform combinations of GI, GR, PreX and portability
  Small group rating restrictions
• Individual GI and rating restrictions
• Any individual market reform
• Benefit mandates for drug and alcohol treatment

• Small group access reforms (GI, GR, PreX limits or portability) were associated with higher rates of coverage overall. But only when all were present did they increase rates of private coverage.
• Group premium restrictions were associated with lower rates of private coverage and lower rates of coverage overall.
• When both access and rating reforms are present, magnitude of effects were fully offsetting.
• Individual market GI and rating reforms were associated with lower rates of coverage overall. Results related to private coverage were consistent but weak.
• Benefit mandate for drug and alcohol treatment decreased coverage overall (but statistical significance of this result was weak).
• Presence of an open high risk pool increased coverage.

• HIPAA+rate regulation, recent
• HIPAA+rate regulation, 2+years
• HIPAA only, recent
• HIPAA only, 2+years

• Number of mandated benefits
• Mandate waiver

• Likelihood of firms offering coverage greater if full or partial reform states (greater effect from earlier vs. recent reforms)
• Among very small firms (1-9 employees) more recent reforms (typically rating reforms, no GI) reduced probability of offer.
• Percent of employees covered within offering firms lower in full or partial reform states (regardless of duration of reforms)
• Among red-lined firms, reforms (early/recent, full/partial) raised probability of coverage more than among all firms.
• Full or partial reforms decreased employee enrollment among establishments offering insurance (but mean value lower in reform states).
• Greater number of mandated benefits increased employee enrollment, for all small firms and for the smallest firms (1-9).
• Reforms generally reduced reported redlining, especially among very small firms, however, rating reforms without GI (recent partial reforms) increased redlining.

• GI
• GR
• Community rating vs. rate bands
• Any reform vs. no reform

• Community rating increases insurance offer rates.
• The presence of any reform increases offer rates among young single workers, but reduces offer rates among high-risk groups.

• GI
• GR
• Portability
• PreX limits
• Mandated benefit waiver
• Number of mandated benefits

• Only PreX restrictions affected firms’ decision to offer insurance, raising the likelihood of offer (significant at 0.10).
• # of mandated benefits significant and reduced firms’ offer of insurance (0.05). Effect was insignificant for firms of 1-9.

• GI
• GR
• Rating restrictions
• PreX restrictions
• Portability

• All five reforms
• All reforms but GI
• GI and rating restrictions
• Other combinations

• GI
• GR
• Rating restrictions
• PreX restrictions

• All reforms
• Other combinations

• uninsured
• privately insured
• Medicaid

• No combination of small-group reforms had an effect on coverage (coverage rate fell with comprehensive reforms and with GI and rating reforms, but these results were statistically insignificant).
• Comprehensive individual market reforms (in any combination) were associated with lower coverage rates overall, and lower private coverage rates in particular. Coefficients were quantitatively large.
• No small group reform, estimated individually, was significantly related to private coverage or coverage overall.
• Individual market GI, estimated individually, decreased coverage overall, but had no significant effect on private coverage.

• Full reform
• Partial reform (excluding “portability only”)
• Bare bones law only

• Full group reforms decreased coverage rates among small-firm workers, especially among low-risk (single men under age 36) workers, even when age and gender are allowed rating factors.
• Full group reforms increased coverage rates among some high- risk workers (e.g., married women of childbearing age with children).
• Constraints on rating by age and gender magnify the negative effects of other group reforms.
• Partial group reforms had a negative but usually insignificant impact on group coverage.
• Bare bones laws had no significant impact on coverage.

• Full reform (both GI and rating reform)
• Partial reform (rating reform but no GI)

• Full reform increased premiums (by about 4 percent), and most of the increase was passed on to workers as increased employee contributions for coverage.
• Full reform decreased the rate of employer coverage (by more than 2 percentage points), but did not decrease the rate of employer offer.
• Full reform decreased the probability that small-group plans could exclude selected individuals or impose a PreX waiting period (by about 5 percentage points).
• Partial reform had no significant impact on offer or coverage, but was weakly associated with lower premiums and lower employee contributions in high risk firms (variously defined).
• No compelling evidence that regulation increased the prevalence of managed care or self-insured plans.

• gender
• age
• health status

• Limitations on health rating reduced group coverage among nondisabled persons and raised group coverage among persons who reported disability (i.e., self-reported condition limiting the respondent’s type or amount of work).
• Limitations on gender rating increased group coverage among women and reduced group coverage among men.
• Limitations on age rating raised group coverage among older workers.
• Persons with disability, older workers and women were more likely to have public insurance in states that prohibit underwriting on health, age, gender.
• Effects insignificant w/ respect to individual coverage.

• PreX limits
• GI (some/all products)
• GI (all products)
• GR
• Rating restrictions on age, health, composite

• PreX limits
• GI (some/all products)
• GI (all products)
• GR
• Rating restrictions on age, health
• High risk pool

• All-product GI was associated with more insurers in the market and less market concentration.
• Shorter PreX waiting periods were associated with greater market concentration.
• Tighter composite rate bands (compared to looser or no composite rate bands) were associated with more insurers in the market, but tighter health rate bands fully offset this effect. On net, a state with full community rating had about the same number of insurers as states with no constraints on rating, all else equal.
• None of the forms of regulation investigated affected HMO, BCBS or commercial market share.

• Some-product GI was associated with greater market concentration, but all-product GI drove less concentration and lower commercial insurer market share. On net, all-product GI states had much less concentrated markets (but not significantly more insurers) than some-product GI states, all else equal.
• Tighter rate bands on health were associated with greater BCBS market share, lower commercial market share and greater market concentration.

• Number of mandated benefits, collectively in “high-cost” categories
• Full reform (GI, rating, GR, PreX and portability)
• Partial reform (rating but no GI)

• Full reform associated with slight decline in employer coverage among workers in firms with fewer than 25 employees.
• Partial reform reduces coverage among groups “vulnerable” to insurance loss: low-educated employees and young, unmarried employees without children.
• Small group reforms are unrelated to other labor market outcomes.