Guaranteed issue

Guaranteed issue

There’s a good post on A Healthy Blog that includes a discussion on Guaranteed Issue in Massachusetts. That’s the rule that means insurers have to accept all applicants, regardless of health status. Massachusetts also has community rating, which means premiums don’t vary based on health status –only age and zip code.

Guaranteed issue and community rating are attacked by critics as left-wing ideas, which drive up costs and interfere with the market. But in my own experience, these rules actually promote entrepreneurial activity (a capitalistic pursuit, last I checked.) As I commented on A Healthy Blog:

When I left my job at a big firm 5 years ago to strike out on my own, I was worried about getting and keeping health insurance. Turns out that’s not a problem in Massachusetts due to guaranteed issue.

In the years since I left, I’ve counseled numerous would-be entrepreneurs. They are all worried about whether they’ll be able to get health insurance once they are on their own, and they are all relieved when they hear about how we do things in Massachusetts.

How many potential entrepreneurs in non-guaranteed issue states are deterred by worries about health insurance availability?

Guaranteed issue doesn’t address affordability of premiums, but having a successful entrepreneurial venture does.

April 26, 2006

3 thoughts on “Guaranteed issue”

  1. Oh man, I’ve said this for years, and no one listens. If we had universal coverage — whether you favor single-payor, multi-payor, or sending all your bills to Bill McGuire (with his $1.6 billion pay day) — I think so many more people would feel secure about leaving their jobs to undertake an entrepreneurial or small-business venture. I know that was my experience.

    I remained a wage-slave until my wife got a job with good benefits, and then I was able to leave and go into business for myself. Did pretty well, too, until divorce meant I had to go find a job again. Now I’m the one with the benefits, and I’ve trained my second wife to do the work I used to when I was in business for myself. We both wish I could quit and we could work together, but she’s got a bit of a health history, and we have two kids. We were quoted $1,600 a month for a family policy that’s not as good as we have now. Unless Tennessee or the Feds pass community rating/guaranteed issue, or God-help-me, single-payor — or until my wife turns our business into something so successful we don’t care how much the premiums are — I’m staying employed by someone else at least until the kids get their own coverage, which is seven years at a minimum.

    I wonder how much entrepreneurial innovation is stifled by our healthcare system in this way? How many people, with how many great, bold, perhaps even world-changing ideas, are out there, wasted because they’re afraid of the health risk of going uninsured?

  2. I just covered the problems with guaranteed issue life insurance in detail in an article on my website (feel free to follow the link). It’s very heavily advertised lately, but has multiple dark sides. It doesn’t make any sense financially if you are qualified for traditional life insurance plans, and the no medical thing – the sad truth is that there’s usually always some sort of health questions section in the contract that makes it easy for the life insurance company to weed out the truly high risk clients. What’s even worse that usually, for the first two years, the beneficiaries are not getting your coverage if you pass away, just the sum of premiums plus interests. Bottom line is, if you have the slightest chance of qualifying for traditional plans, forget about it. Otherwise, be sure to consult with a renowned independent life insurance broker and have him search for a plan that groups you into a pool of healthier people, translating into the lowest premiums possible.

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