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New Grant Awarded: Sustaining Individual Health Insurance Markets under Community Rating and Open Enrollment to Joel Cantor, PI and Alan Monheit, co-PI

Funded by the Commonwealth Fund and The Robert Wood Johnson Foundation, the Institute's Center for State Health Policy will conduct an assessment of the New Jersey Individual Health Coverage Program (IHCP). The individual, non-group health insurance market plays a small but important role in providing health insurance coverage in the US. Although only about 8% of non-elderly Americans are covered through the individual market during a given year, those enrolled generally do not have access to employer health insurance or eligibility for public coverage. This individual market, characterized by high administrative costs, risk selection, underwriting restrictions and market segmentation, has been the subject of increased regulation among states. Although interest in assuring comprehensive access to individual coverage is high, policymakers are cautions about possible adverse consequences from comprehensive regulation. Insurance theorists warn that guaranteed issue and community rating can lead to adverse risk selection and ultimately an adverse selection "death spiral". Early experiences in the most highly regulated states appear to support this view, but rigorous evidence about the effects of these kinds of reforms in health insurance markets is scant.

The overall goal will contribute to knowledge about the viability of community rating, guaranteed issue and related reforms in individual health insurance markets. The specific research questions are: 1) How has the distribution of risk by age, health status, and utilization history in the IHCP changed between 1995-96 and 2001-02 overall and compared to the risk distribution among those with group coverage and the uninsured? 2) What are the potential effects of permitting modified community rating in the IHCP (e.g., community rating within age-sex-region groups)? 3) What are the coverage-related characteristics of IHCP participants (e.g., coverage history, labor-force attachment, family structure, socioeconomic status, and eligibility for current or future public subsidy programs)? 4) How does access to care among those in the IHCP compare with those with group coverage and uninsured controlling for health status, income and other factors?

Data will be analyzed from the New Jersey Family Health Survey (NJFHS), a comprehensive survey of a probability sample of about 2,500 New Jersey families. Results will be compared to an earlier study of New Jersey's individual insurance market (Swartz and Garnick, Journal of Health Politics, Policy and Law, 2000) to document changes in this market since the mid 1990s.

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