	Background

Title I of HIPAA established standards for health coverage access, portability, and renewability that apply to employer-sponsored plans in the group market and, to a more limited extent, to the individual market.Group market provisions include limitations on preexisting condition exclusion periods; a requirement that previous coverage be credited to reduce or eliminate a new employee’s preexisting condition exclusion period; restrictions against excluding an employee from the health plan on the basis of his or her health status; and special enrollment opportunities for certain employees, such as those who did not enroll because they were previously covered under a spouse’s health plan. With respect to guaranteed coverage for small employers, quantitative evidence about the effects of the provision does not yet exist, but early evidence suggests that experiences vary considerably among states, in large part on the basis of the extent of pre-HIPAA state reforms. This was probably the case because many large employer plans had already incorporated portability protections similar to those of HIPAA. HIPAA Has Improved Access, but Not Price, for Certain Individuals Losing Group Coverage

HIPAA’s group-to-individual portability provision ensures that people who are losing group coverage are guaranteed access to at least two individual market products, although these individuals, if in poor health, will probably pay more than the standard rate. The amount of the premium increase varies considerably. HIPAA-Eligibles With Health Problems Generally Pay Higher-Than-Standard Premiums

HIPAA does not limit the premium price carriers may charge eligible individuals for coverage. All 22 states using their high-risk pool as an alternative mechanism impose a premium cap for coverage in the pool of 200 percent of the standard rate or less, and about half cap premiums at 150 percent of the standard rate or less. Few People Rely on HIPAA’s Group-to-Individual Portability Provision

The number of people that rely on HIPAA’s group-to-individual portability provision to obtain coverage is difficult to quantify, particularly in states using the federal rules and states using an alternative mechanism other than a high-risk pool. Limited Consumer Awareness and Understanding of HIPAA May Constrain Benefit to Consumers

Consumer awareness and understanding of HIPAA remain limited, and those who have heard of the law often believe it provides broader access and protections than it does. Consequently, federal agencies and other entities have undertaken educational efforts that target specific populations—such as those changing jobs or losing group coverage—in an attempt to reach those who are most likely to benefit from HIPAA’s protections. Over 1 year later, most consumers are still largely unfamiliar with the law, according to agents, carriers, and state regulators. States have also undertaken a variety of efforts to better educate consumers about HIPAA, although the extent of these efforts varies among states. HIPAA Established New Federal Regulatory Responsibilities

HIPAA established a complex regulatory framework in which oversight and enforcement of the law are shared among multiple federal agencies and state regulators. Nonetheless, some concerns persist. The Health Insurance Portability and Accountability Act of 1996: Early Implementation Concerns (GAO/HEHS-97-200R, Sept. 2, 1997).
Why GAO Did This Study

Pursuant to a congressional request, GAO provided information on: (1) the implementation status of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) provisions in the group insurance market; (2) the price of coverage for certain individuals losing group insurance; (3) the extent of consumer understanding of HIPAA as well as federal, state, and private efforts undertaken to educate consumers about the law's protections; and (4) federal efforts undertaken to ensure HIPAA compliance.

What GAO Found

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.