Health Insurance Reform: State Failures

In the past 20 years, eight states have passed individual mandates that require insurance to be purchased by every person residing in the state. Supreme Court Justice Louis Brandeis envisioned using the various states as experimental test areas prior to inflicting those programs on the rest of the nation. Unfortunately, in none of those states have the experiments in health insurance reform been very successful.

Reform measures in other states have proven to be expensive duds. Maine's 2003 reform plan, Dirigo Health, included a government insurance option resembling the public option included in the House health-care bill. This public plan, "DirigoChoice," was supposed to expand care to all 128,000 of Maine's uninsured by 2009. But according to the U.S. Census Bureau, the 2007 uninsured rate remained roughly 10%—essentially unchanged. DirigoChoice's individual insurance premiums increased by 74% over its first four years—to $499 a month from $287 a month—according to an analysis of Dirigo data by the Maine Heritage Policy Center. The cost of DirigoHealth to taxpayers so far has been $155 million.

In 1993, New York passed an idividual mandate that prohibited insurers from excluding "pre existing conditions". That mandate was an attempt to make health insurance available to all at a reasonable price. Regrettably, it has been an object failure in containing costs. In 1994 there were roughly 752,000 people enrolled in individual insurance plans, or 4.7% of the nonelderly population. This put New York in the zone as the rest of the states. As of today, that figure has fallen significantly to just 0.2% of the state's nonelderly population. That number deviates tremendouly from the national average in which over the 13 year period of 1994-2007, the number of people insured by individual plan in the U.S. rose to 5.5% from 4.5%. The sharp decline in people registered in individual plans is blamed on the sharp rise in premiums. It has been etimated that 42% could be cut from the costs of premiums by eliminating community rating system and guaranteed issue provisions.

A 2008 analysis by Kaiser Permanente's Patricia Lynch published by Health Affairs noted that in addition to Washington and New York, the individual insurance markets in Kentucky, Maine, Massachusetts, New Hampshire, New Jersey and Vermont "deteriorated" after the enactment of guaranteed issue. Individual insurance became significantly more expensive and there was no significant decrease in the number of uninsured

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Additionally, Massachusetts, the most recent state to implemented an individual mandate in 2007, suggests what will happen on a national scale. Health-insurance premiums there have risen much faster than in the rest of the country. According to the Commonwealth Fund, a nonprofit health foundation those costs are now $13,788, the most expensive in the nation. Furthermore, those few insurance companies that are permitted to operate within Massachusetts are planning additional double-digit hikes. This is expected to force most companies to shift those added costs onto workers, according to the Boston Globe.

And health-care costs have continued to grow rapidly. According to a Rand Corporation study this year, the growth now exceeds state GDP by 8%. The Boston Globe recently reported that state health-insurance commissioners are now worried that medical spending could push both employers and patients into bankruptcy, and may even threaten the system's continued existence.

In the mean time, data from the Massachusetts Medical Society shows that many primary care physicians are getting squeezed financially, and are no longer accepting new patients. Additionally, wait times for care are increasing. This is merely a preface to what will happen on a much larger scale if these same programs are implemented on the much larger national scale.