A number of reform proposals, however, would force insurers to sell policies at fixed prices - no matter how sick or how well the applicants are. Under these proposals, insurers would have to overcharge low-risk (healthier) people in order to undercharge high-risk people. Whereas guaranteed renewability would encourage people to purchase health insurance (because they would be confident that, once sick, they would be able to continue coverage at reasonable rates), guaranteed issue would have the opposite effect. Why buy health insurance today if you know you can buy it for the same price after you get sick?

Virtually all studies of guaranteed-issue insurance have concluded that it increases premiums. For example, a recent study for the Society of Actuaries compared medically underwritten policies with guaranteed-issue insurance, under which all preexisting illness limitations were waived after 12 months.

"Virtually all studies of guaranteed-issue insurance have concluded that it increases premiums."

The study showed that:

• The cost of guaranteed-issue insurance was 23 percent higher the first year and 50 percent higher the second.
• The seven-year cost of guaranteed-issue insurance was 39 percent higher.
• These numbers imply that if people who are now medically underwritten could buy only higher-priced guaranteed-issue insurance, from one-fifth to one-half of them would choose to be uninsured.

State reforms intended to make affordable health insurance available to everyone have created a crisis in the market for individually purchased health insurance in Washington state, say insurance analysts.

Since 1994, Washington has required insurers who offer individual health policies to sell to any purchaser (called guaranteed issue), and it limits the waiting period for coverage of pre-existing conditions to three months. In addition, since 1995 the state has had "community rating," which restricts insurers from charging different premiums according to risk.

The effect of these reforms has been exactly opposite the announced intention of policy makers:

• Costs are higher, with six insurers sampled by the state Health Care Policy Board reporting an increase in the average cost per enrollee of 29.5 percent between 1993 and 1995.
• Premiums are rising faster than the national average; for example, most of the enrollees in Blue Cross of Washington and Alaska are paying 36 percent more than before reform -- with another 11.4 percent rate increase scheduled for 1997.
• Fewer people have insurance, with enrollment in the individual insurance market declining 13.4 percent among the five largest insurance carriers in 1996, partly in response to rate increases enacted in late 1995.

Costs are rising and fewer people are covered due to adverse selection -- meaning healthier people are dropping insurance coverage to avoid the increasing expense. For example, in the Pierce County Medical plan, the people who dropped their coverage in 1995 had average claims about 15 percent lower than those who stayed in.

Not only is insurance more expensive, say analysts, but consumers have fewer choices: