Approximately 2.5 million people in the U.S.--about 1 percent of the population--suffer from pre-existing medical conditions making it likely their future medical expenses will be extremely high.
While private insurers are ill-equipped to serve this population, 28 state governments play a positive role by chartering nonprofit health insurance plans, or HIPs.
In order to keep premiums affordable, HIPs are often authorized to impose a small assessment on the premiums earned by private insurers. Capping HIP premiums at no more than 125 to 135 percent of standard individual insurance premiums appears to be a best practice for keeping HIPs affordable.
HIPs accomplish the social goal of assuring access to quality medical care for those who need it, without the disruptions and negative side effects caused by regulation of the insurance industry.
