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Health Insurance Regulation: Varying State Requirements Affect Cost of Insurance

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Report Type Reports and Testimonies
Report Date Aug. 19, 1996
Report No. HEHS-96-161
Subject
Summary:

As concern about the affordability of health coverage has grown, the costs attributed to state regulation of health insurance have come under increasing scrutiny. State health insurance regulation is intended to protect consumers through oversight of health plans' financial solvency, monitoring of insurers' market conduct to prevent abuses, and mandated coverage for particular services. Although these measures do benefit consumers, they result in costs to insurers that are ultimately passed on to consumers in their premiums. These costs may influence an employer to self-fund its health plan--a move that avoids state insurance regulation. This report examines the costs associated with (1) premium taxes and other assessments, (2) mandated health benefits, (3) financial solvency standards, and (4) state health insurance reforms affecting small employers. GAO discusses the impact of these requirements on the costs of insured health plans compared with the cost of self-funded health plans.

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