How has small group market reform affected employee health insurance coverage?

Abstract

In the early 1990s, over 40 states passed legislation designed to limit a number of exclusionary practices by insurers in the small group market in order to improve the availability and affordability of health insurance to employees in small firms. In this paper, we address the effects of reform on the likelihood that workers are offered insurance, have employment-based coverage, or are policyholders of an employment-based plan. We use differences-in-differences (DD) and differences-in-differences-in-differences (DDD) estimators to evaluate the differential effects of alternative reform measures on high and low risk workers. We generally find little effect of reform on offer rates and find that, in states with the most stringent reform, employment-based coverage and policyholder rates increased for high risk workers relative to low risk workers. Our results also indicate that the effects of reform varied significantly by the extent to which states adopted guaranteed issue.