How Eight States Destroyed Their Individual Insurance Markets

Published September 24, 2004

Since February of this year, Health Care News has featured a series of monthly case studies documenting how community rating and guaranteed issue mandates have destroyed the individual health insurance markets in eight states. These mandates are not merely poorly crafted laws: They represent fundamentally bankrupt ideas in what should be a voluntary, consumer-driven insurance marketplace. They have succeeded only in making individual insurance less available and more expensive than it otherwise would be; hundreds of thousands of people have been shut out of the health insurance market in these states.

With the exception of Kentucky and New Hampshire, where policymakers are attempting to restore the free market and individual choice, the states we have profiled have done little to address the serious damage their 1990s’ interventions have caused. It remains to be seen whether elected officials in Maine, Massachusetts, New Jersey, New York, Vermont, and Washington State will move in the direction of a more consumer-driven health care marketplace by taking our recommendations to heart. Specifically, we urge state policymakers in these states to:

  • Repeal community rating and guaranteed issue mandates.
  • Roll back mandated insurance benefits by allowing insurers to offer “mandate-lite” and even mandate-free policies.
  • Give individuals who buy insurance the same tax breaks as those whose employers provide insurance.
  • Encourage the use of Health Savings Accounts by giving public employees the option to choose them and providing state income tax deductions for deposits made to the accounts.
  • Establish a high-risk health insurance pool for the medically uninsurable by using the $1 million seed money fund established by the Bush administration under the 2003 Trade Adjustment Act.

Quick Links

February 2004 – Destroying Insurance Markets: Introduction to a Series

February 2004 – The New Jersey Car Wreck

March 2004 – Health Insurance Meltdown in Vermont

April 2004 – New York Health Insurance: “Consumers Are Outraged”

May 2004 – Kentucky Governor Fletcher Seeks Insurance Reform

June 2004 – Washington Hopes to Recover from Failed Reforms

August 2004 – Massachusetts Will Try Anything … Except Markets

September 2004 – New Hampshire: Valiantly Seeking Market Reform

October 2004 – Maine Health Insurance: Out of the Frying Pan, into the Fire