The Health Insurance Portability and Accountability Act of 1996

Pursuant to a congressional request, GAO provided preliminary information on emerging Health Insurance Portability and Accountability Act (HIPAA) implementation issues, focusing on the extent to which market participants may be generating unintended consequences in response to the act.

GAO noted that: (1) the issues GAO identified reflect potential problems perceived by market participants during the early stages of GAO's field work performed between May and July 1997; (2) GAO did not try to validate specific issues raised or determine the extent to which these problems actually exist; (3) discussions with federal agencies, state regulators, carriers, trade associations, and other affected parties identified the most prominent issues or those with unintended consequences; (4) some issues primarily affect consumers: (a) health plan marketing practices and segregated risk pools may negatively affect access and premiums for people eligible for group to individual portability under HIPAA; (b) guarantee renewal requirements for some individuals may have negative consequences for consumers and carriers/health plans; and (c) some consumers may make poor choices on the basis of misconceptions about HIPAA; (5) other issues primarily affect carriers/health plans: (a) required certificates of creditable coverage may generate an administrative burden and may be unnecessary in most cases; and (b) full credit for high deductible and less comprehensive plans may result in adverse selection; (6) other issues primarily affect federal or state regulators: (a) questions remain about the ultimate regulatory roles of federal and state agencies; and (b) although all state alternative mechanism plans have been submitted and found acceptable, concerns about funding and access remain; (7) as implementation continues to unfold, GAO expects to identify more issues, and some current issues may cease to be of concern; (8) at initial implementation hearings, much discussion involved the timing of specific provisions and concerns about whether the Health Care Financing Administration, Department of Labor, and the Treasury Department would be able to issue the initial regulations in a timely fashion; (9) they ultimately did so; (10) now the focus has shifted to clarifying and interpreting specific requirements in the regulations; and (11) in the near future, different issues may emerge as state legislatures continue to modify state laws to comply with HIPAA and as insurers and consumers more fully confront the effects of the act on health insurance markets.