Abstract

The market for people who buy their own coverage has long been a troubled segment of the health insurance industry. Individual policies frequently are unavailable to those with preexisting health conditions, premiums are expensive, and benefits are limited. Many states have attempted to reform their individual health insurance market by requiring carriers to sell coverage to all applicants regardless of age or health; creating high-risk pools for those with preexisting conditions; and placing limits on the extent to which premiums can vary by age, sex, or health status. This study assesses the effectiveness of such regulatory reforms in seven states. The authors endorse reforms that deal with availability and affordability, including requiring insurers to offer coverage to all with reasonable waiting periods for preexisting conditions; requiring standardized benefits; limiting permissible rating factors and rate variation; and most important, finding ways to insure individuals through the group market.