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Rules Governing California's Individual Health Insurance Market

Deborah Reidy Kelch

Obtaining individual health insurance can be daunting and the rules governing such policies are complex. This issue brief explains how California’s market is structured and regulated and provides a comprehensive review of the limited options for individuals.

This issue brief examines the state and federal laws that apply to the individual health insurance market in California as of April 2005. It provides a comprehensive overview of the differences between individual and group coverage and explains the basic rules that apply to individual policies, including treatment for pre-existing conditions, guarantees on renewal, protections for higher-risk individuals who maintain their coverage, and regulations governing the transition from group to individual coverage.

Individual coverage is the main alternative for those not covered through employment and not eligible for publicly subsidized health coverage. Nearly 8% of non-elderly Californians, or about 2.4 million people, are now participating in the individual insurance market.

First published in June 2003 as a reference for consumer advocates, brokers, health policy leaders, and health plan staff, this updated brief includes:

  • A summary table and description of the rules that apply when changing from group to individual coverage;
  • A table summarizing rules that apply when individuals are not transitioning from group coverage; and
  • A description of the Major Risk Medical Insurance Program (MRMIP), including the pilot project.

This analysis concludes that as employers continue to scale back or drop health insurance for workers and their dependents, demand for individual coverage is likely to grow. However, without additional regulation, the high cost, limited consumer protections, and regulatory complexity of the individual market hold little potential for reducing the number of uninsured in California.

The updated issue brief can be found under Document Downloads below.

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