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Journal of Health Politics, Policy and Law 25.1 (2000) 133-173

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Riding the Bull:
Experience with Individual Market Reform in Washington, Kentucky, and Massachusetts

Adele M. Kirk *


States have been slower to enact reforms of their individual health insurance markets than on their small group markets, and few have undertaken the combination of guaranteed issue and rating restrictions that is now common in the group market. Of those states undertaking significant individual market reforms, several, including Massachusetts, New Hampshire, New Jersey, and New York, have been motivated to do so in part by the financial difficulties of their state's Blue Cross Blue Shield insurer, who prior to reform had served as the "insurer of last resort." In contrast, Kentucky and Washington implemented individual market reforms as part of ambitious, comprehensive health care reforms in the early 1990s that encompassed their group markets and health providers as well. Those comprehensive efforts were motivated by concern over the dual problems of increasing numbers of uninsured people and rapidly rising health care costs and a conviction that only a comprehensive solution would address these problems.

The reform experience of states like Kentucky is held up by some as a strong cautionary lesson for other states contemplating reform. Kentucky's complex experience is often summed up in the popular press as a one-sentence story along the lines of the following statement: Kentucky [End Page 133] implemented reform and all of its insurers left. States such as Kentucky and Washington may well hold lessons for other states, but policy makers should understand the political context of these reforms and how they were implemented before concluding that a set of core reforms per se yields a particular result.

The following case studies attempt to provide that context for three states that have undertaken significant individual market reforms: Washington, Kentucky, and Massachusetts. Each case study describes the events leading up to reform and traces the history of reforms from legislation through implementation, and in two cases, through subsequent partial repeal measures. Each study then examines available data on market conditions in the period that follows, including products, rates, enrollment, and insurer experience with and reaction to reform.


These studies draw on a number of sources and types of information, including extensive semistructured interviews with officials with the state departments of insurance, insurers and insurer representatives, insurance agents, state legislative staff, and consumer advocates. They use information from written sources including white papers and other documents produced by state departments of insurance, the reform statutes and subsequent department of insurance rules, and press reports from newspapers and the business press. Some data on market structure are based on the Alpha Center's health insurance database, while financial data on particular insurers come from annual filings to the state.

Several factors pose problems for anyone attempting to evaluate the effects of insurance reforms on a state's market, particularly the individual market. The first is that comprehensive, reliable data on basic issues --such as how many insurers are selling in the state and how many enrollees are covered--are difficult if not impossible to find. Even if, as is sometimes the case, states begin to gather such data following reform, there seldom exists comparable information from pre-reform to serve as baseline measures. Gathering data on, and ascribing meaning to, changes in individual enrollment is particularly difficult because the individual market is a residual market, that is, a market where people generally seek coverage only when they do not have access to other coverage (see Table 1 for estimates of employer-sponsored coverage, individual insurance, and uninsured individuals for each of the study states). [End Page 134] [Begin Page 136]



Washington State's individual market reforms occurred as part of comprehensive health care reform efforts that began first in the early 1990s with several special commission reports and one round of failed reform legislation. The push for comprehensive health reform began in 1990, when Democratic Governor Booth Gardner appointed the Washington Health Care...


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pp. 133-173
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Archived 2005
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