States’ Experience with Guaranteed Issue and Community Rating

Personal Finance
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Of the 10 states that tried instituting the combination of community rating and guaranteed issue, many have either repealed or reformed the measures.

Key takeaways from these 10 states’ experience:

  • Anticipation of the death spiral can cause insurers to leave the individual market.
  • States that began with a 3:1 ratio for community rating often reformed the measure by widening the ratio.
  • States that did not start with an individual mandate, or a requirement to buy insurance, sometimes had to add one.[1]


[1] “The Impact of Guaranteed Issue and Community Rating Reforms on States’ Individual Insurance Markets,” Milliman, March 2009.

 

Death Spiral States


Source: “The Impact of Guaranteed Issue and Community Rating Reforms on States’ Individual Insurance Markets,” Milliman, March 2009. 

 

“It is one of the happy incidents of the federal system, that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.” Justice Louis D. Brandeis (1932)