Private Health Insurance

Minimum standards of protection now apply to group (both fully insured and self-funded) and individual insurance coverage sold in all states. As a result, many consumers face fewer exclusions for preexisting conditions, enrollees should be able to more easily renew their health plans, employees may not be excluded from group health plans on the basis of their health status, small employers must have guaranteed access to all coverage sold in the small group market, and high-risk individuals losing group coverage may have better access to either individual health insurance or a subsidized high-risk pool. Nonetheless, high-risk individuals and some small groups may continue to face high premiums for guaranteed coverage, and relatively few high-risk individuals who lost group coverage appear to have purchased individual insurance guaranteed by the Health Insurance Portability and Accountability Act of 1996. Consumers' lack of awareness or understanding of the act can impede their ability to exercise their rights. One potentially effective education tool is the certificate of creditable coverage that must be issued to every enrollee who loses insurance coverage. However, guidance on this certificate does not explicitly and comprehensively outline the law's protections. Both the Health Care Financing Administration (HCFA) and the Department of Labor recognize that further efforts are needed, including targeting consumer education efforts, proactively ensuring employers' compliance, and ensuring that all states' insurance regulations fully conform with federal standards. Moreover, HCFA recognizes that its ability to fully perform its new regulatory role will be enhanced when enforcement regulations are issued.

GAO noted that: (1) implementation of HIPAA's insurance standards in the group market has proceeded relatively smoothly--particularly among larger group plans--although carriers and employers continue to express some concerns about certain administrative and interpretive aspects of HIPAA; (2) this ease of transition has occurred partly because many of these group plans had already provided key HIPAA protections before the law was enacted; (3) concerns exist about the extent to which some smaller employers are performing certain required tasks; (4) with respect to HIPAA's requirement that carriers guarantee access to coverage for certain smaller employers, early evidence suggests experiences vary considerably among states, largely depending on the extent of state-level reforms that preceded HIPAA; (5) HIPAA's group-to-individual portability provision ensures that certain consumers who lose group coverage are guaranteed access to at least two individual market insurance products; (6) the so-called HIPAA-eligible individuals who have certain health conditions often pay a higher-than-standard premium for individual coverage, although the amount of the premium increase varies considerably; (7) all but 3 of the 41 carriers GAO surveyed in states using HIPAA standards would charge a HIPAA-eligible with a specified health condition a higher-than-standard rate, and nearly half of these would charge 300 to 464 percent of the standard rate; (8) the average premium for individual coverage for HIPAA-eligibles with a specified health condition that would be charged by the 41 carriers was $381 per month; (9) the 22 states that use a high-risk pool as an alternative to the federal portability standards limit premiums to 200 percent or less of the standard rate, or an average subsidized rate of $221 per month; (10) the exact number of individuals who rely on HIPAA's group-to-individual portability provision to obtain coverage is difficult to determine but appears small according to carrier estimates and risk-pool enrollment figures; (11) consumers' understanding of HIPAA remains limited, and many are largely unfamiliar with the law; (12) federal agencies and others have targeted educational efforts to specific populations in an attempt to reach those most likely to benefit from HIPAA; and (13) HIPAA established a complex regulatory framework in which oversight and enforcement of the law are shared among multiple federal agencies and state regulators.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Team: Phone: