State’s Policies Ruined Health Care Market

Published August 1, 2005

Vermont’s state government contributed to the state’s uninsured problem by mandating guaranteed issue (forbidding insurance companies from denying coverage to anyone who applies for health insurance, including people who are already sick) and community rating (requiring insurance companies to charge the same premium to everyone, regardless of age, health history, lifestyle choices, and other factors) in the health insurance market.

The late Conrad F. Meier, former managing editor of Health Care News, wrote a special eight-part series in 2004 documenting the damage these laws have done in states that have adopted them. (See “How Eight States Destroyed Their Individual Insurance Markets,”

“Community rating and guaranteed issue have wreaked havoc on Vermont’s small group and individual insurance markets, just as they have in states across the country,” Meier wrote in March 2004. “The percentage of the state’s population that is uninsured has increased, not fallen, since the mandates were imposed; premium rates have increased; and more Vermonters than ever are having to settle for government-run Medicaid in order to get insurance. Vermont is now second in the nation, after Tennessee, in the proportion of its under-65 population covered by Medicaid (21 percent).”

Meier noted, “Repealing community rating and guaranteed issue mandates should be high on the reform agenda. Mandated insurance benefits, which needlessly raise the price of insurance, should also be rolled back. Giving individuals who buy insurance the same tax breaks as those whose employers provide insurance is yet another promising reform.”

Meier also recommended creation of a statewide high-risk pool to address the needs of the medically uninsured and uninsurable without skewing the insurance market for everyone else, and better payments from the public system to health care professionals and facilities.

In a 2001 article for Health Care News (“Vermont Suffers Under Health Insurance Illusion,”, Vermont State Rep. Frank Mazur (R-South Burlington) reported that in Pennsylvania, a family plan with a $1,000 deductible cost $190 a month; in Connecticut, $230 a month. In Vermont, he noted, such a policy would cost more than twice as much, $543 a month.

— Sean Parnell