In the 1990s, several states adopted community
rating to improve perceived inefficiencies in their nongroup health
insurance markets. Using data from the Survey of Income and Program
Participation, Lo Sasso and Lurie find that community rating was
associated with older, unhealthier individuals being more likely
to be covered by nongroup health insur-ance. By contrast, among
younger, healthier individuals, community rating was associated
with a reduction in the likelihood of being covered by nongroup
insurance. Conversely, they find that community rating was associated
with a rise in uninsurance rates for younger, healthier individuals
and a reduction in uninsurance rates for older, unhealthier
individuals. The results suggest that the enrollees as a group
were sicker after community rating was implemented. The authors
also find evidence of insurers trying to alter their products
to regain a measure of risk selection ability after community
rating eliminated medical underwriting as a market segmentation
tool. They find that HMO penetration in
the nongroup market increased disproportionately in states that
implemented community rating relative to states that did not.
Anthony T. Lo Sasso, Institute
for Policy Research, Northwestern University; and School of Public
Health, University of Illinois at Chicago Ithai Z. Lurie, Research Associate, Institute
for Policy Research, Northwestern University
Click on
the working paper title at the top of this
page to download a free pdf of the paper.*
If You Need to Order a Hard Copy: Hard copies
of IPR working papers cost $5.00 each (international orders are $10 each). We only accept checks drawn on U.S. bank and payable in U.S. funds. Checks or money orders should be made
payable to Northwestern University and sent to the following address:
Publications Department - WP Orders
Institute for Policy Research
2040 Sheridan Rd., Evanston, IL 60208-4100.
For information, call 847-491-8712 or email ipr@northwestern.edu.
Please note that we do not accept credit cards.
*Adobe Acrobat Reader 5.0 (or higher) is needed to read the Acrobat pdf.
If you need to install Acrobat Reader, click the button below. Once the file
has downloaded onto your desktop, run it to install the reader on your hard
drive.
