Examining the Impact of States that Tried Reforms without #TheLink

In the 1990s, eight states enacted guaranteed issue and community rating reforms without implementing an individual mandate to ensure individuals purchased coverage. According to a study by Milliman, the results were disastrous. Premiums increased, coverage was disrupted, and there was no reduction in the uninsured population.

The report notes,  “Of the eight states we studied, two (Kentucky and New Hampshire) have since repealed guaranteed issue and community rating laws in their individual markets entirely, and one (Washington) has significantly weakened its original community rating and guaranteed issue provisions.  Maine and New Jersey have relaxed their community rating requirements as well.”

Highlights of each state’s experience are below:


  • “Kentucky’s experience with health insurance reform of the individual market is often held up as an example of failure and unintended consequences.”
  • “According to a memorandum by the Kentucky Legislative Research Commission, more than 40 insurers had left the individual market by January of 1998.”
  • “By late 1996, only one health insurer and the Kentucky Kare (a self-insured plan for state employees that also sold policies to individuals through the purchasing alliance) were selling new policies to non-association individuals.”


  • “After the implementation of these reforms, there was a decline in the number of carriers participating in the indemnity market.”
  • “Of the five carriers offering individual health insurance in 1994, only [one] was issuing new business in 2001.”
  • “According to a white paper prepared by the Maine Bureau of Insurance, by 2001 it was ‘clear that the future viability of the individual health market in Maine [was] at serious risk.’  Moreover, the Bureau concluded that ‘the market for individual HMO coverage does now appear to be in a death spiral,’ citing poor experience and large rate increases.”


  • “In 2006, Massachusetts adopted comprehensive bi-partisan legislation aimed at expanding health insurance coverage to the state’s uninsured residents.  Among the key provisions impacting the individual market are an individual mandate requiring individuals to purchase insurance or face fines…”
  • “…Massachusetts health care reform has been successful in achieving its goal of near universal coverage, with over 98% of residents having insurance coverage in 2010.”

New Hampshire

  • “Despite the introduction of premium subsidies for the individual market in 1998…by 2000 only two indemnity insurers based outside of New Hampshire were actively participating in New Hampshire’s individual market.”
  • “Further declines in enrollment eventually led to the repeal of guaranteed issue and community rating reforms in the individual market effective in 2002.”

New Jersey

  • “From 1996 through 1998, carriers with small market shares were raising rates significantly (in one instance, by 415% over the two years), losing enrollment, and exiting the market.”
  • “By 2000, only one small market share carrier remained.  At present, there are only six companies selling individual insurance in New Jersey.”
  • “In a 2004 study, Monheit et al. described the IHCP [individual market] as “a market heading for collapse.”  They found enrollment in the program had declined much more rapidly than national trends and that premiums had increased more rapidly than in the group market.”

New York

  • “By 1996, the GI and CR requirements effectively eliminated the commercial individual indemnity market in New York with the largest individual health insurer exiting the market.”
  • “Despite repeated legislative intervention in subsequent years and shifts towards managed care, premiums increased following reform and enrollment decreased in New York’s individual market at a rate greater than the national average in the years immediately following reform.”


  • “In 1999…the two insurers with the largest individual market share after BCBS-VT both decided to leave the individual market.  After that, the individual market continued to decline.”
  • “The Insurance Department study further found that…the individual market ‘has in essence become a high risk pool.’”
  • “Hall found ‘no clear evidence that Vermont’s individual market reforms have significantly increased enrollment or decreased the overall level of the uninsured, either statewide or in the individual market.’”


  • “In the late 1990s, the three largest carriers closed their individual blocks to new business, citing mounting losses.  Smaller carriers had also been leaving the market, and individual health insurance became unavailable in many counties.”
  • “It is clear that individual insurance reforms in Washington directly caused many insurers to leave the individual market.  It also appears that the individual insurance market decreased in size faster than the national average after the enactment of reform.”

For more on the Link between market reforms and the mandate, visit thelink.ahip.org.

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