Health Insurance Portability

Although federal and state laws have improved the portability of health insurance, an individual's health care coverage could still be reduced when changing jobs. Between 1990 and 1994, 40 state enacted small group insurance regulations that include portability standards, but the federal Employee Retirement Income Security Act of 1974 prevents states from applying these standards to the health plans of employers who self-fund. As a result, some in Congress have proposed broader national portability standards. GAO estimates that as many as 21 million Americans each year would benefit from federal legislation to ensure that workers who change jobs would not be subject to new health insurance plans that impose waiting periods or "preexisting condition" exclusions. In addition, as many as 4 million Americans who at some point have been unwilling to leave their jobs because they feared losing their health care coverage would benefit from national portability standards. Such a change, however, could possibility boost premiums, according to insurers.

GAO found that: (1) although current federal and state laws have improved the portability of health insurance, an individual's health care coverage can still be reduced when changing jobs; (2) 40 states enacted small group insurance regulations between 1990 and 1994 that included portability standards, but the federal Employee Retirement Income Security Act of 1974 prevents states from applying these standards to the health plans of employers who self fund; (3) up to 21 million Americans a year would benefit from federal legislation that would waive preexisting condition exclusions for individuals who have had continuous health care coverage; and (4) as many as 4 million Americans who have been unwilling to leave their jobs because of concerns about losing their health care coverage would benefit from national portability standards.