NCPA - National Center for Policy Analysis

Heartland Study: Insuring The Uninsurable

November 22, 1999


Approximately 2.5 million people in he U.S.--about 1 percent of the population -- suffer from pre-existing medical conditions that make it likely their future medical expenses will be extremely high, according to Conrad Meier of the Heartland Institute. 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.

  • HIPs increase access to health insurance by allowing insurers to place people with pre-existing medical conditions into pools and subsidizing their premium.
  • 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 mandating the insurance industry cover such patients.

Currently, states without HIPs often require private insurers to write policies for the medically uninsurable -- a practice that is called guaranteed issue. This creates problems for a majority of residents, such as higher premiums and a larger number of uninsured, in addition to doing serious damage to the insurance marketplace.

Source: Conrad F. Meier "Extending Affordable Health Insurance to the Uninsurable" Policy Study No.91, August 27, 1999, Heartland Institute, 19 South LaSalle Street, Suite 903, Chicago, Ill. 60603, (312) 377-4000.


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