No. 91 Extending Affordable Health Insurance to the Uninsurable

Published August 1, 1999

While private insurers are ill-equipped to serve this population, 28 state governments play a positive role by chartering nonprofit health insurance plans, or HIPs. In order to keep premiums affordable, HIPs are often authorized to impose a small assessment on the premiums earned by private insurers. Capping HIP premiums at no more than 125 to 135 percent of standard individual insurance premiums appears to be a “best practice” for keeping HIPs affordable. HIPs accomplish the social goal of assuring access to quality medical care for those who need it, without the disruptions and negative side effects caused by regulation of the insurance industry.

This Heartland Policy Study makes the following key points:

  1. Ordinary insurance markets may not work for people with pre-existing medical conditions.
  2. State-chartered health insurance plans (HIPs) provide affordable health insurance without regulation or bureaucracy.
  3. States with successful HIPs follow several best practices.
  4. HIPs can help states comply with the Health Insurance Portability and Accountability Act of 1996 (HIPAA).