The literature examining the impact of state regulation on health insurance coverage has expanded significantly in the last decade. The earliest research investigates the effect of state benefit mandates on employer offer of coverage and, later, on coverage of the population.1 More recent research examines the impact of other types of regulation -- guaranteed issue and renewal, and rate regulation. All of these studies investigate the impact of the states’ access regulation prior to implementation of the federal Health Insurance Portability and Accountability Act (HIPAA).
Despite advocates’ hopes that health insurance access laws might improve overall rates of health insurance coverage, the preponderance of the research literature finds that comprehensive reforms have little net impact on the general rate of coverage among the population. However, such regulation may affect the risk composition of the insured population (that is, older people and people with health problems may gain coverage while younger, healthier people may drop coverage), and different forms of regulation may have different levels and direction of impact.
This research attempts to improve on past studies of regulatory impacts on coverage in two ways. First, in contrast to past studies of the impact of regulation on coverage, we construct continuous variables to measure the restrictiveness of rate regulation and statutory limits on the length of preexisting condition exclusions in the group and individual health insurance markets, and we consider each market separately. By constructing continuous regulation variables where possible, we are able to overcome some of the statistical difficulties that have constrained other research studies of health insurance regulation. Specifically, we are able to understand the impacts of different types of regulation and also the impact of less or more restrictive regulation in each market.
Second, we look at the potential role of competition among insurers in explaining changes in health insurance coverage. In an earlier research paper (Chollet, Kirk and Simon, 2000), we investigated the change in the structure of health insurance markets that followed a change in regulation. That research found some impact of selected types of regulation on the number of insurers and concentration in the group market. In the individual market, regulation appeared to affect industry concentration and commercial insurers’ market share. These findings suggest that access regulation may affect insurance prices — and therefore coverage — both indirectly (by affecting some aspects of market structure) and directly (as insurers anticipate or experience changes in revenues or medical losses due to regulation). In this paper, we extend existing research by investigating the impact of regulation on group and individual health insurance coverage, controlling for the potential effects of market structure.
The paper is organized as follows. In Section 2, we offer a brief review of the recent literature that estimates the impact of state regulation on the probability of employer group coverage among workers or among the entire population under age 65. In Sections 3, we describe our research design, data and methods. In sections 4 and 5, we present our findings related to the small-group market and the individual market, respectively. We summarize the paper and present our conclusions in Section 6.