| This research assesses the impact of community rating laws and other state health insurance market reforms in the small group and individual markets on health insurance coverage, including changes in the overall number of uninsured as well as specific effects on different risk groups. The primary data source for this research is the Current Population Survey (CPS) from 1990 to 1996. Data on health insurance regulation by state and by year were obtained from the National Conference on State Legislatures (NCSL). A logit model is applied to the pooled cross-sectional data to study the impact of health insurance regulation on the categorical dependent variable, private health insurance coverage status. The types of regulation considered include guaranteed issue, guaranteed renewal, limits on preexisting conditions exclusions, and various rating rules ranging from rating bands to pure community rating. When individual and small group market reforms are considered separately, their impact on small firm employees and the self-employed is difficult to assess. However, reforms are generally implemented as packages. In split sample models, weak reforms in the small group market had a significantly positive impact on the odds of coverage for lower income low risks (p = .01, odds ratio = 1.10) and for lower income high risks (p = 0.02, odds ratio = 1.18). Strong reforms in the individual market had a significantly negative impact on the odds of coverage for lower income high risks (p = 0.02, odds ratio = 0.72)—a surprising finding for this vulnerable group.; In the absence of mandates to purchase insurance, policies which pool higher and lower risk groups may either increase or decrease overall coverage as people enter or leave the health insurance market. The net impact on equity is unclear. Healthy young workers may see their insurance rates increase and may choose to drop coverage. Yet healthy young workers may also be low income workers. When crafting any regulatory reforms in health insurance markets, attention should be focused on the effect of this legislation on vulnerable groups, such as those with lower incomes. |
