AN EXAMINATION OF STATE NON-GROUP AND SMALL-GROUP HEALTH INSURANCE REGULATIONS
January 30, 2008
Periodically state politicians decide to take it upon themselves to "do something about health care." At present there is a clear upswing in state initiatives designed to improve access to affordable health care, says Anthony T. Lo Sasso, of the University of Illinois at Chicago.
- Massachusetts has already implemented a program intended to eliminate uninsurance in the state through a combination of policies including an employer "pay or play" mandate, Medicaid expansions and, controversially, an individual mandate to purchase coverage.
- California is wrestling with a similar proposal introduced by Governor Schwarzenegger in early 2007.
- Pennsylvania, Illinois and a number of other states are considering programs of their own.
It remains unclear how these initiatives will play out. A far bigger question is what effect any of these initiatives will have on the health status of the newly insured or the population in general, says Lo Sasso. It seems to be largely forgotten in health policy circles and the general consciousness that insurance (of all kinds) is fundamentally about protection from financial disaster and that the causal link between health insurance and health is tenuous at best.
Predictable distortions can result from regulations aimed at improving perceived deficiencies in the non-group and small group health insurance markets. The predictions from economic theory are unambiguous and the bulk of the scholarly literature consistently point to decreases in coverage for young and healthy individuals and (with less regularity) increases in coverage for older and unhealthier individuals. A common sense look at the premiums for non-group health insurance policies in regulated and unregulated markets suggests that regulated markets offer only limited options for the healthy and still quite expensive options for the unhealthy, says Lo Sasso.
Source: Anthony T. Lo Sasso, "An Examination of State Non-Group and Small-Group Health Insurance Regulations," American Enterprise Institute, Working Paper, January 3, 2008.
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