SMALL-GROUP REFORM IN A COMPETITIVE MANAGED CARE MARKET - THE CASE OFCALIFORNIA, 1993 TO 1995

State-level insurance reforms designed to make health insurance more a ccessible for small businesses and their employees have become common in the 1990s. This study examines the effects of small group reform le gislation enacted in California in 1993. Using survey data on health b enefits in small firms, we look at changes in health insurance coverag e that occurred between spring 1993 (just before reform) and spring 19 95. Our results indicate that insurance became slightly more affordabl e and, among businesses with three to nine employees, employer provisi on increased more than 10 percentage points. Provision was unchanged a mong larger-sized businesses, however. Managed care penetration increa sed considerably. We argue that California's competitive health insura nce market, which already was dominated by managed care, represented a favorable environment for small group reform. In this context, the mo dest growth in insurance provision highlights the limited potential of incremental reforms for expanding insurance coverage.