Rigging the System with New Regulation
Jeet Guram /
As a follow-up to earlier posts on the so-called consumer protections included in the bills backed by Congressional leadership, a state level survey by America’s Health Insurance Plans (AHIP) offers additional analysis of the effects of regulation on health insurance premiums.
The AHIP report shows that the states with the three highest premium averages all require community rating and guaranteed issue. Of course, a range of other factors (such as demographics) affect the price of insurance, but these regulations do play a significant role in driving up costs. As the report explains:
…states with guaranteed issue and community rating rules tend to have higher than average premiums. Knowing that they could purchase coverage at any time, younger and healthier people may not do so in sufficient numbers to balance insurance pools. When this happens, premiums reflect the higher average costs of older and less healthy people, and people with low- or moderate-incomes may not be able to afford coverage.