The nongroup (individual) health insurance market provides access to coverage for persons who cannot obtain health insurance coverage through their employer or do not qualify for public programs. For some persons it provides a temporary source of coverage while between jobs or for early retirees who are not yet eligible for Medicare. The population covered through the individual market is relatively small, and this market provides relative ease of access to affordable coverage for persons who are comparatively young and/or in reasonably good health. For older, less healthy persons there can be some barriers to health coverage in the nongroup market. Applicants for coverage usually must go through an underwriting process, which may result in higher premiums than they might pay for coverage in the group insurance market, lack of coverage for specific conditions, or rejection for coverage entirely.
States, as the primary regulators of insurance companies and insurance products, try to improve access to health insurance through the passage of various types of laws and regulations. In the absence of federal reform activities, some states have implemented their own reforms with greater or lesser degrees of success. Some states such as Maine, Massachusetts, and Vermont, have implemented comprehensive reforms to emphasize shared responsibilities for obtaining health coverage, while at the same time easing access to affordable plans. Other states have taken more incremental approaches such as Washington and Illinois, to cover all children, while states such as Connecticut, Idaho, Indiana, and others have expanded coverage to young adults by changing the definition of “dependent” and extending coverage for those older than 18.
Actions such as implementing guaranteed issue, community rating laws, various mandated requirements, and reforms as mentioned above, have differing effects on the cost and availability of health coverage for insurance applicants of differing characteristics. Policymakers must be cognizant of how these laws and regulations surrounding the individual health insurance market affect their ability to meet various population needs as they attempt to reform the health insurance market.