America’s Health Insurance Plans, “Individual Health Insurance 2006-2007: A Comprehensive Survey of Premiums, Availability, and Benefits,” December 2007. Bunce, V. & Wieske, J. (2008) Health Insurance Mandates in the States 2008, Council for Affordable Health Insurance, 2008 Families USA, “Failing Grades: State Consumer Protection
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.
States, in their actions, can and do make very different decisions about how to regulate the individual health insurance market. These actions reflect different values, political climates, and expectations. They also are designed to achieve specific policy goals, such as expanding access, with most states having considered laws and/or regulati
The previous sections of this report describe some of the types of regulations that states can implement in their governance of the individual insurance market. However, within each of the major areas of regulation there is wide variation in the requirements that have been implemented. For example, within a rating structure that may be imposed
States have issued other types of regulations to ensure access to the individual private health insurance market. Among the more common are pre-existing condition limitations and medical loss ratios.
While almost all health insurance policies cover the usual medical expenses associated with hospital, surgical and out-patient care received from licensed facilities and medical personnel, other requirements for coverage can be implemented through state regulations. One way to spread the cost of a medical condition or treatment among a broad pop
A handful of states have enacted rating reforms for the individual health insurance market, prohibiting or restricting insurers from charging higher premiums based on health status or the risk of having future medical claims. These rating restrictions are generally of two types: rate bands and community/adjusted community rating.
The Regulation of the Individual Health Insurance Market. Factors Utilized in Rating Practices in the Absence of State Regulation
Medical underwriting (examining health status) is the process that insurers use to evaluate an application for insurance.
With some variation, there are two distinct approaches to rating methods, or the process by which insurers calculate policy premiums, allowed by states.
States have sought to improve access to insurance policies through several regulatory approaches.
Every state has adopted certain basic standards for health insurance that apply to all types of health insurance products. These standards protect consumers by requiring insurers to be financially solvent and capable of paying claims, pay claims promptly, and adhere to certain market conduct requirements. Regulation begins with the licensing o
The business of insurance, including health insurance, has traditionally been regulated at the state level. States license entities that offer health insurance coverage and have established laws that control their structure, finances, and obligations to the people that they insure. However, a number of federal laws also have an impact on priva
Although the majority of Americans with health insurance obtain their coverage through group health plans offered through their employers, many individuals obtain their coverage through the nongroup (or individual) insurance market. Currently almost 18 million persons, or almost seven percent of the United States nonelderly (under age 65) popula
A copy of the literature review with complete references is attached as Appendix 2.
Consumer Response to a National Marketplace for Individual Insurance. Appendix 4 - State-specific Premiums and Scenario Adjustors
STATE S_PREM F_PREM S_FLATE F_FLATE REG MIN MOD MAX SCEN1 SCEN2 SCEN3 SCEN1_P SCEN2_P SCEN3_P AK 1529 2683 1.051066 1.001716 S 1.10
Consumer Response to a National Marketplace for Individual Insurance. Appendix 3 – State Level Variation in Regulatory Impact
STATE Average State Premium Single 200B Family 2008 State/National Premium Ratio State Regulation Presence (0/1) Single Family Community Rating Any Willing Provider Guaranteed Issue Number of Mandates AK *3,435 *5,821 1.371 1.253 0 0 0
Literature Review for Effects of State Regulations on Health Insurance Premium in the Small Group and Non-Group Markets
Full Description of Simulation Methods
Buchanan, J. L. and Marquis, M. S. (1999). Who gains and who loses with community rating for small business? Inquiry, 36 (1), 30-43. Congdon, W. J., Kowalski, A., and Showalter, M. H. (2005). State Health Insurance Regulations and the Price of High-Deductible Policies. Unpublished manuscript accessed at http://www.byu.edu Congressional Bu