Baseline Information for Evaluating the Implementation of the Health Insurance Portability and Accountability Act of 1996: Final Report. Premiums


We will focus here on questions about changes in premiums in the individual market. The states that adopted new guaranteed issue or guaranteed renewal provisions in the small group market have not typically introduced new rating restrictions. Thus, we would not expect premiums of groups that purchased insurance prior to HIPAA to change—unless insurers do not risk rate, as discussed in Part II. The average level of paid premiums might rise if more expensive groups enter the market because of the small group reforms, but this is likely to be a small effect. To investigate this change, one would want to study employers who offer insurance and the premiums they pay. As we have noted, the MEPS-IC data are best suited for this purpose, but they are not available within the time frame of our proposed evaluation. Over the longer run, one could look at average premium changes in the contrast groups shown in Table 1. We estimate that samples in the MEPS-IC survey would be large enough to detect a 10 percent increase in premiums in group B or C relative to constant premiums in group D with 80 percent power.

Our recommendation for the HCFA(now known as CMS) evaluation focuses on two topics: (1) the risk spreading mechanism states have adopted and (2) the change in premiums in the individual market.