1990’s Reforms Led to Higher Premiums and Fewer Choices for Washington Consumers

For Immediate Release
May 8, 2012

Robert Zirkelbach

New case study examines Washington state’s experiment with guarantee issue in the absence of a mandate

Washington, D.C. – Consumers in the state of Washington experienced higher premiums and loss of choice following the enactment of guarantee issue without an individual mandate in the 1990’s. Washington’s reforms also failed to reduce the number of uninsured.

These are among the takeaways of a new case study released today by America’s Health Insurance Plans (AHIP) that examines the impact of the Washington state’s implementation of well-intentioned health insurance market reforms in the absence of a personal coverage requirement.

“When thinking about the impact of potential Supreme Court rulings, there is no substitute for real-world experience. Washington state’s experience demonstrated that passing market reforms without requiring broad participation in the system does not work.  The linkage is essential,” said AHIP President and CEO Karen Ignagni.

According to the study, the reforms Washington enacted in 1993 resulted in substantial increases in the premiums charged for individually purchased policies; a dramatic reduction in the number of carriers writing policies for individuals in the state from 19 to only two; and a 30 percent increase in the number of uninsured between enactment of the initial reform law and the turn of the new century.

The case study notes “the law was not implemented as originally intended, and as Washington residents soon discovered, unless these types of insurance market reforms are paired with an effective requirement for everyone to purchase coverage, serious market disruption is likely, creating real problems for employers, families and individuals.” 

According to the Office of the Insurance Commissioner in Washington: “In 2000, a higher percentage of residents was uninsured than before the 1993 reform act, and our state's three largest issuers in the market stopped writing new individual policies."

AHIP recently released an updated study from Milliman Inc, examining the experience in states that enacted guaranteed issue and community rating reforms in the absence of an individual mandate. The report found that these states’ individual insurance markets deteriorated as consumers experienced higher premiums, coverage disruptions and loss of choice.

Studies from a range of independent experts have examined the impact of severing the mandate but retaining key Affordable Care Act market reforms. While the studies differ on the magnitude of the impact of severing the mandate, they all find that doing so would result in a dramatic rise in the uninsured population and higher premiums compared to heath reform with a mandate.

To learn more about the impact of delinking guarantee issue and community rating from the individual mandate please visit http://thelink.ahip.org

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