In previous research, Milliman, one of the nation’s top actuarial firms, provided an overview of the impact made by guaranteed issue and community rating reforms on the health insurance markets within eight states in the 1990s. Retained by America’s Health Insurance Plans (AHIP), Milliman has published an update to this study in its March 2012 report, The Impact of Guaranteed Issue and Community Rating Reforms on States’ Individual Insurance Markets.

The eight states researched include Kentucky, Maine, Massachusetts, New Hampshire, New Jersey, New York, Vermont, and Washington, each of which enacted a version of guaranteed issue and community rating in the 1990s. Guaranteed issue and community rating reforms aimed to improve health insurance accessibility by ensuring coverage was not denied or provided at a higher premium for older or unhealthy individuals.

While results varied from state to state, the study found that:

  • Individual health insurance markets deteriorated after guaranteed issue or community rating reforms were enacted, as measured by market size, premium level, and insurance option availability.
  • Insurance companies often ceased individual insurance sales in the market following enactment, resulting in decreased competition.
  • Individual insurance enrollment decreased while premium rates increased following enactment.

Significant drops were not observed, however, in the level of uninsured individuals after reforms were enacted. Kentucky and New Hampshire, the former of which faced severe consequences as a result of piecemeal reform application and resulting re-segment of the market, have repealed guaranteed issue and community rating laws entirely. Both New Jersey and Maine have since relaxed community rating requirements. North Dakota and Iowa repealed their laws, with the former experiencing a near collapse of its market following implementation. New reforms have been introduced in at least two states to target universal coverage.

To read or download the full report, click here (PDF).