Kentucky's 1994 Health Reform Law Resulted in Higher Premiums, Fewer Choices for Consumers

For Immediate Release
May 22, 2012

Robert Zirkelbach

New Case Study Details Unintended Consequences of Enacting Insurance Market Reforms Without an Individual Mandate 

LOUISVILLE, KY (May 22, 2012) – Insurance market reforms enacted in the 1990s resulted in higher premiums and reduced access to coverage for Kentucky consumers, according to a case study released today by Healthcare Aware of Kentucky, a new, Louisville-based, health-care consumer-awareness group, and America's Health Insurance Plans (AHIP). The Kentucky experience highlights the significant unintended consequences of enacting guarantee issue and community rating reforms without an individual mandate.

The Health Care Reform Act Kentucky passed in 1994 guaranteed access to coverage for all consumers without regard to pre-existing medical conditions and premiums could not be varied based on a person's health status.  The law did not require all individuals to purchase health care coverage, providing a powerful incentive for people to wait to purchase coverage until after they need medical care.  As a result of these reforms, individuals' insurance premiums skyrocketed, in some cases over 100 percent, and the number of uninsured Kentuckians did not meaningfully decrease.

The disruption that occurred in the state's insurance marketplace forced most of the state's health insurers to leave the market, and some of those that remained went out of business. In 1993, 43 carriers were offering individual health policies in Kentucky.  By 2000, just two carriers remained.   As a result of this disruption and the public outcry that ensued, key provisions in the law were changed in 1996 and 1998.

"When evaluating the impact of potential Supreme Court rulings, there is no substitute for real-world experience. Kentucky provides an important lesson for Washington that guarantee issue and community rating do not work unless everyone participates in the system," says AHIP President and CEO Karen Ignagni. 

Vickie Yates Brown, a Kentucky-based attorney who has studied health care reform and is past chair of the Health Law Section of the American Bar Association, calls the Kentucky experience "a catastrophe that put affordable coverage out of reach for many Kentuckians."

Ms. Brown's comments are echoed by Mike Hammons, a policy expert who served on the Kentucky Health Policy Board during the early years of the state's health care reforms.  Had Kentucky coupled insurance reforms with a coverage requirement, he said "I think [the law] would have worked and more states would have done it."

The case study will be made available through IGE Media, a publisher of the health-care publications Medical News and Medical News for Me.  Ben Keeton, owner of IGE, helped initiate Healthcare Aware to examine health-care issues affecting consumers. "Health care is a major issue for everyone, and with the Supreme Court's ruling expected next month on the Affordable Care Act, now is the time for our community to engage in a conversation about the future of healthcare and its impact on the people who use it every day," Keeton said.

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 download a copy of the Kentucky case study, visit or

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