chapter  11
Insurance market reform: when, how, and why?
ByKATHERINE SWARTZ
Pages 16

There is wide variation in the extent to which insurance companies and managed care companies (hereafter collectively referred to as carriers) are regulated by states. Until the early 1980s, states with greater regulation of health insurance markets did so in a way that often mirrored regulation of public utilities – i.e., state commissioners of insurance or insurance departments focused their attention on justifications of rate increases and the financial reserves of the carriers. But over the 1980s and 1990s a number of states used their regulatory powers to try to assure more people access to health insurance either by restricting rate setting based on people’s characteristics (chiefly medical conditions and age) or by requiring carriers to accept all applicants or renew policies for existing enrollees. The use of these regulations raises several questions. When is it appropriate to introduce regulatory reform to health insurance markets? How can states create effective reforms, and what standards should be used to measure effectiveness? Why might regulations of health insurance markets be good policy instruments?