Evaluating the Performance of State Individual Markets Using the Individual Market Effectiveness Index

Current efforts to effectively understand the individual market are often limited because they take a national rather than state view of the individual market. The individual market’s performance can vary significantly by state and meaningfully evaluating its performance requires a state-by-state examination. We developed the individual market effectiveness index (IMEI) to provide a more nuanced approach to evaluating the individual market. The IMEI provides a more evidence-based approach to evaluating the performance of state individual markets relative to an economic ideal. Rather than focusing solely on only the buyer experience (i.e., increasing premium costs) or only the seller experience (i.e., increasing claims costs), the IMEI incorporates both a buyer- and seller-centric economic model/framework that captures a more holistic market view. We find that the individual market experience varies from state-to-state and that most markets performed poorly in 2016.