NCPA - National Center for Policy Analysis


December 18, 2009

For an individual government mandate to compel the purchase of health insurance, another government requirement for something called "guaranteed issue" must first be enacted.  "Guaranteed issue" forces every insurance company to sell health insurance to every applicant regardless of age, health history, lifestyle or risk factors. 

In theory, this appears sound.  If health insurance companies can't "just say no" to high-risk applicants, no one will be left without access to coverage.  Unfortunately, the law of unintended consequences trumps this logic.  Under guaranteed issue mandates, "access to coverage" becomes "access to higher premiums," says Dr. Linda Halderman, a General Surgeon and policy adviser in the California State Senate.

For example:

  • In New Jersey and Massachusetts, unlike in California, laws were passed to force every insurance carrier to sell plans to every individual applicant; individual insurance premiums in New Jersey and Massachusetts are three times higher than those in California.
  • Washington State tried guaranteed issue, but with no way to mitigate risk, insurance carriers in the state suffered severe financial losses related to high-risk patients; they then exited the individual market; no individual health insurance plans were accessible to Washington residents at any price.
  • Sen. Hillary Clinton was not a New Yorker in 1993, the year New York State forced guaranteed issue on the health insurance market; as a result, rates for a third of all those insured increased by 20 percent to 59 percent, causing 500,000 New Yorkers to cancel their health insurance plans.

The Heritage Foundation published a 1998 study evaluating the 16 states in which the most aggressive health insurance mandates and regulations were passed between 1990 and 1994.  The goal of these individual, employer and insurance industry mandates-including individual mandates, guaranteed issue and price fixing of premiums-was to increase access to coverage and decrease the uninsured population in a given state.  The effects were than compared with the 34 states that had not enacted such regulations:

  • The two groups of states shared nearly equivalent rates of uninsured residents before the reforms.
  • But by 1996, the sixteen states with the most aggressive reforms (including New Jersey, New York and Washington) experienced a growth rate in their uninsured population eight times higher than the 34 states without such mandates.
  • Additionally, the percentage of the population covered by private or individual insurance declined.

Source: Linda Halderman, "Senate's Solution: Consumer Choice Is Dead on Arrival," American Thinkers, December 16, 2009.

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