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.
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.
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|
|District of Columbia 3||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|
|Rhode Island 4||No Policy||Same|
|South Carolina||Weak Policy||Same|
|South Dakota||Weak Policy||Same|
|Tennessee 5||Weak Policy||Same|
|Virginia 6||No Policy||Same|
|West Virginia||Weak Policy||Same|
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.
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.