	Background

Because most Americans receive their health insurance from their employers, changing jobs can disrupt their health care coverage. As shown in figure 1, most of these preexisting condition exclusions last for 1 year or more. Federal and State Laws Promote Health Insurance Portability

The Congress and the states have taken several initiatives to improve the portability of health care coverage. State Initiatives

Recently, we reported that most states enacted small group health insurance reforms between 1990 and 1994. Estimating the Number of Individuals Affected by National Health Insurance Standards

Overall, we estimate that as many as 21 to 25 million people per year could be affected by national portability standards, should they be enacted. In response to these concerns, S. 1028 as approved by the Senate Committee on Labor and Human Resources includes a provision that requires anyone converting to an individual health plan to have had continuous group health care coverage for the preceding 18 months for the portability standards to be effective. Although many states have enacted portability standards for insurance carriers, ERISA preemption prevents states from applying the standards to self-funded employer-based health plans. We estimate that as many as 21 million to 25 million Americans a year could possibly benefit from proposed national portability standards.
Why GAO Did This Study

Pursuant to a congressional request, GAO provided information on: (1) the protections offered by current state and federal health insurance portability reforms; (2) the number of people who could be affected by broader national portability standards; and (3) other issues related to the design of national portability standards.

What GAO Found

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.