Can Fifty-One Laboratories Cure What Ails the Individual Health Insurance Markets?

Abstract

The United States’ individual health insurance markets have long been fraught with problems. Before the Affordable Care Act (ACA), these markets were almost entirely regulated by states, the vast majority of which did not protect people with preexisting conditions. In addition, consumers went separately to brokers, agents, and insurance companies to buy their health insurance plans, making it difficult to comparison shop and often leading to confusion about what was covered. One of the goals of the ACA was to fix these problems, and a key measure of its success has been how well the individual market has fared since. Over the years, we have seen that there are 3 important characteristics of a stabilized health insurance market. The first is a large risk pool with a good balance of healthy and sick people. The second is multiple participating insurance carriers. And the third, which is the most important for consumers as well as the most politically salient, is steady premiums. This chapter will explore the policy levers states can use to promote market stability and thereby improve health insurance affordability and increase the number of insured residents.