What Guaranteed Issue Without A Mandate Looks Like

The premium analysis data that Wellpoint recently released regarding the impact of pending health care reform legislation on health insurance premiums has been met with scathing attacks from people who are saying that Wellpoint is just trying to derail health care reform any way they can.  From the very beginning, Jay and I have been in favor of sweeping health care reform.  We know that there are many aspects of the current system that are broken, self-serving, and not in the best interests of the American people – especially the uninsured.

But it is frustrating to see data that appears to be supported by tangible evidence from other states being skewered as “fatally flawed”. 

In New York, health insurance companies can’t decline applicants because of pre-existing conditions.  Policies are community rated, with pricing variations only for the number of people in a family and zipcode where they reside.

I tried searching on google to find a brokerage like ours, serving NY, but I wasn’t able to find one.  So I used the big box store of health insurance – ehealthinsurance – and got quotes for my own family, but with a NY zipcode.  Three quotes were returned.  Three.  They varied in price from $304/month for a policy that looked like it only covered expenses relating to a hospital stay (and had no out-of-pocket maximum), to $2572 for an HMO with all the bells and whistles.  Only two companies were represented (GHI and Empire Blue Cross Blue Shield).  To say the pickings were slim would be an understatement.  Not to mention that if we wanted anything more than an indemnity hospital plan, our health insurance premium would be more than our mortgage.

For comparison’s sake, when I get quotes on our website for our family here in Colorado, I get 459 options from eight reputable carriers, ranging in price from $133/month, to $991/month.  True, we have to be relatively healthy in order to qualify for any of those plans, but if we weren’t, we’d have Cover Colorado as a fallback option.

In NY, individual policies are guaranteed issue, but people are not required to have health insurance.  The result is that policies are much more expensive than they would be in other states, and most health insurance companies don’t do business in NY anymore.  Healthy people who want to purchase a policy find that they can’t afford to do so, and the population of people with individual health insurance in NY is dramatically smaller than it was before guaranteed issue became law.

So for people who are crying foul over the Wellpoint premium analysis, I would urge them to consider what’s happened to health insurance in places like NY.  Yes, companies like Wellpoint are in business to make a profit.  But that doesn’t mean that everything they say in the health care reform debate should be dismissed.  And if we don’t make sure that everyone becomes part of the health insurance pool (via a strong, enforceable mandate), we’ll likely be looking at fewer health insurance companies and far higher premiums after a few years of guaranteed issue policies.

About Louise Norris

Louise Norris has been writing about health insurance and healthcare reform since 2006. In addition to the Colorado Health Insurance Insider, she also writes for healthinsurance.org, medicareresources.org, Verywell, Spark by ADP, and Boost by ADP, and Gusto. Follow on twitter and facebook.


  1. Jim Sugden says

    Thanks for your sensible approach to an enforceable mandate. It’s time that our legislators stopped trying to solve problems withthier hearts alone and used their heads. We cannot cover the uninsured by destroying the private system or by heaping more debt onto an already dysfunctional government health insurance system.

  2. Louise:
    I agree with you that not having the mandate drives up the premiums quite a bit.
    So, the mandate helps initially.
    However, over time, we know that even individual policies become prohibitively expensive for most people, particularly if their health deteriorates.
    What suggestions do you have to deal with this problem?
    Don Levit

  3. Don,
    Part of the currently proposed legislation would include restrictions limiting the cost of health insurance for older people to a maximum of three times the cost of coverage for younger people, so there wouldn’t be as much of a disparity in pricing as there is now.
    In addition, the rules about guaranteed issue coverage would end up helping older, sicker individuals, as they would pay lower premiums than they do now.
    As long as we have a strong mandate requiring all of the healthy people to have coverage, claims made by older and/or sicker people wouldn’t be as much of a burden on the system. But if we continue with the weak mandate as currently written, I believe that premiums will become even more expensive for the people who continue to have coverage in the future (since more and more healthy people will choose to go uninsured, knowing that if they become ill, they can get coverage with no pre-existing condition limitations).
    In addition, I prefer policies that keep the same pricing structure for new and existing policies, as opposed to carriers that raise prices on existing policies faster than rates on new policies. I would like to see all carriers switch to this model, as it forces them to keep premiums competitive for all members, and doesn’t punish people who get “stuck” on a policy because of a medical condition.

  4. So why don’t they just call it what it is, a tax? It’s for the greater good right? We make everyone pay something so that everyone get’s something. But it boils down to simply imposing a new tax on people. That tax may come with a benefit, but so do all my other taxes i.e. law enforcement, military, fire department, etc. But you don’t wanna call it that, because it’s a nasty three letter word. This is the land of the free right? But not freedom to not pay for health insurance if you don’t want it. After all, we have to make you pay, so people who aren’t as healthy as you won’t have to pay so much. That make sense.

  5. Joe,
    I do understand your position, but it comes with consequences that I doubt many uninsured-by-choice are really willing to accept. The “freedom to not pay for health insurance if you don’t want it” has to be coupled with the knowledge that if you are unable to pay for your medical care in the event that you need it, you will not be treated (and very few people have millions of dollars lying around in a bank account somewhere to pay for unexpected medical bills). That means that a person who chooses to go uninsured and then suffers a brain bleed after falling on a patch of ice and needs a half million dollar stay in the ICU will agree to die instead. No bankruptcy allowed, no medical care given without proof of payment. That’s really the only fair way to allow the option that you’re proposing. But I seriously doubt that many people would be in favor of that proposal.

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