Regulation of Insurance for Individual Coverage

The majority of American women have health insurance either through an employer or through a public program such as Medicaid, but a small percentage of nonelderly women purchase health coverage directly from insurance companies in what is known as the “individual market.” For the 18% of women who are currently uninsured—those who lack access to employer coverage, or who earn too much to qualify for public programs—the individual insurance market is often the last resort for coverage.

Buying insurance in the individual market is very different from getting health insurance through an employer. Women who get health insurance from their employer are protected by several important federal and state laws. For example, most employers cannot charge their employees different premiums for their health insurance.1 In contrast, states are left to regulate the sale of health insurance in the individual market; and in the vast majority of states, few if any such protections exist for women who purchase individual health coverage.

The Report Card examines whether states have enacted protections for people seeking to buy plans in the individual market. For example, states can require policies to be sold on a guaranteed issue basis, which guarantees access to coverage for all applicants regardless of health status. States can also mandate a minimum or standardized benefits package and establish rules prohibiting rate discrimination based on health status (known as community rated premiums). In addition, states that allow insurers to discriminate based on health status can create high-risk pools as a source of coverage for people who are turned down or charged more by private insurers because they have a “pre-existing condition.” The new federal health care law establishes high-risk pools in each state beginning in 2010 to help adults who are uninsured and have a pre-existing condition get insurance until the major coverage provisions of the new law come into effect in 2014.2 The Report Card gives credit to states that established high-risk pools before this new federal law was enacted.

Impact of the Affordable Care Act: 

Every state has established its own high-risk insurance pool (called a "pre-existing condition insurance plan" or PCIP) or opened a federal PCIP through which uninsured people with pre-exisiting conditions will be able to obtain coverage. This is a temporary measure until 2014, when all new health plans must accept anyone who applies for coverage, cannot exclude coverage based on pre-existing conditions, and are prohibited from charging higher premiums based on gender or health status.

Does the state regulate individual health plans to guarantee their accessibility?

States receive a "meets policy" if they have a guaranteed issue mandate for all health plans and require minimum benefit packages and community rated premiums. States that have a more limited guaranteed issue mandate (e.g. only certain health plans must comply) and which have some rules restricting premium rating receive a "limited policy." States receive a "weak policy" if they only create high-risk pools (note that some high-risk pools may be closed or have limited eligibility) and a "no policy" if they have minimal or no regulation of the individual market.

State Strength of Policy Change from 2007
Alabama Weak Policy Same
Alaska Weak Policy Same
Arizona No Policy Same
Arkansas Weak Policy Same
California Weak Policy Worse
Colorado Weak Policy Same
Connecticut Weak Policy Same
Delaware No Policy Same
District of Columbia 3 No Policy Same
Florida Weak Policy Same
Georgia No Policy Same
Hawaii No Policy Same
Idaho Limited Policy Same
Illinois Weak Policy Same
Indiana Weak Policy Same
Iowa Weak Policy Same
Kansas Weak Policy Same
Kentucky Weak Policy Same
Louisiana Weak Policy Same
Maine Meets Policy Same
Maryland Weak Policy Same
Massachusetts Meets Policy Same
Michigan Limited Policy Same
Minnesota Weak Policy Same
Mississippi Weak Policy Same
Missouri Weak Policy Same
Montana Weak Policy Same
Nebraska Weak Policy Same
Nevada No Policy Same
New Hampshire Weak Policy Same
New Jersey Meets Policy Same
New Mexico Weak Policy Same
New York Meets Policy Same
North Carolina Weak Policy Better
North Dakota Weak Policy Same
Ohio Limited Policy Same
Oklahoma Weak Policy Same
Oregon Limited Policy Same
Pennsylvania Limited Policy Same
Rhode Island 4 No Policy Same
South Carolina Weak Policy Same
South Dakota Weak Policy Same
Tennessee 5 Weak Policy Same
Texas Weak Policy Same
Utah Limited Policy Same
Vermont Meets Policy Same
Virginia 6 No Policy Same
Washington Limited Policy Same
West Virginia Weak Policy Same
Wisconsin Weak Policy Same
Wyoming Weak Policy Same

Policy Indicator Counts
Meets Policy: 
5
Limited Policy: 
7
Weak Policy: 
31
No/Harmful Policy: 
8
Better: 
1
Same: 
49
Worse: 
1

Data Source: The Kaiser Family Foundation, State Health Facts Online, "Individual Market Guaranteed Issue," and "Individual Market Rate Restrictions," 2010, available at http://www.statehealthfacts.org/comparetable.jsp?ind=353&cat=7, accessed September 7, 2010; and, "Standardized Plans in the Individual Market," March 2009, available at http://www.statehealthfacts.org/comparereport.jsp?rep=6&cat=7, accessed September 7, 2010. 

Footnotes: 

1 Under Title VII of the Civil Rights Act of 1964, employers with 15 or more employees are prohibited from charging employees different premiums for health insurance based on gender or other factors.  42 U.S.C. § 2000e-2(a)(1) (2008).  An employer must non-discriminatorily provide to all similarly situated employees the same opportunity to enroll in any health plans it offers. An employer must also ensure that the terms of its health benefits are non-discriminatory.  In addition, almost every state has a law against sex discrimination in employment along the same lines as Title VII.  Health insurance benefits must be provided without regard to the race, color, sex, national origin, or religion of the insured.  See also U.S. Equal Employment Opportunity Communication, Directives Transmittal No. 915.003 EEOC Compliance Manual Chapter 3: Employee Benefits, October 3, 2000, available at http://www.eeoc.gov/policy/docs/benefits.html, accessed August 26, 2010.

2 The Patient Protection and Affordable Care Act, Pub. L. No. 111-149, § 1101 (2010).

3 In the District of Columbia, Blue Cross Blue Shield serves as an "insurer of last resort" and offers one individual health insurance policy to any D.C. resident regardless of health status.

4 In Rhode Island, Blue Cross Blue Shield serves as an "insurer of last resort" and offers individual health insurance on a guaranteed issue basis during a 30-day open enrollment period each year.

5 Tennessee was graded incorrectly in the 2004 Report Card.  It should have received a "weak policy" instead of a "no policy." Since there is no change in the individual state law for this state, the comparison with 2007 is based on the underlying data, that is, there is no change from 2007.

6 In Virginia, Blue Cross Blue Shield serves as an "insurer of last resort" and offers at least one individual health insurance policy to any Virginia resident regardless of health status.

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