Health Care Policies

Health Insurance Mandates Causing More Uninsured

The U.S. Census Bureau estimates 41.4 million people -- 17.7 percent of the nonelderly population -- are without health insurance. This is up from 35.7 million, or 16.6 percent, in 1990.

Health care costs, and therefore insurance premiums and the percentage of people who are uninsured have grown relatively slowly in recent years. But some policy analysts fear that health insurance premiums may grow by 8 to 10 percent in 1998.

One reason is new health mandates from state and federal governments, including "guaranteed issue," which requires health insurers to sell policies to anyone regardless of health.

For example, New Jersey, which publishes its health insurance rates, has both guaranteed issue and "community rating," in which all insured people are charged the same premium regardless of their health status.

  • A standard family health insurance policy ($500 deductible, 20 percent copayment) costs an average of $1,560 per month, or about $18,700 a year, as of June 1997 -- with the lowest rate being $830 and the highest $2,290 per month, or $35,040 a year (see figure).

  • In April 1995 that same plan cost about $750 per month - less than half the current amount.

  • Even the state's most restrictive HMOs cost more than $700 a month for family coverage - nearly twice the national average.

  • As a result coverage in the individual health insurance market has declined by about 15 percent since the end of 1994.

By contrast, neighboring Pennsylvania, which has not implemented guaranteed issue and community rating, has relatively low premiums - about $300 per month for a 37-year-old head of family in Reading, Pa. - for a policy similar to that in New Jersey.

The Patient Access to Responsible Care Act (PARCA), sponsored by Sen. Alfonse D'Amato (R-N.Y.) and Rep. Charles Norwood (R-Ga.) and cosponsored by more than 200 members of Congress, has a guaranteed issue provision. As a result, PARCA could impose guaranteed issue nationwide.

Source: Merrill Matthews Jr. (vice president of domestic policy, National Center for Policy Analysis), "Explaining the Growing Number of Uninsured," Brief Analysis No. 251, January 12, 1998, National Center for Policy Analysis, 12770 Coit Rd., Suite 800, Dallas, Texas 75251, (972) 386-6272.

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