INSURANCE PORTABILITY ACT IS ONE STEP TOWARD HEALTH CARE REFORM

The new Health Insurance Portability law offers important new protections for an estimated 25 million Americans concerned about health insurance if they move to a new job or have a pre-existing condition.

But a University of Wisconsin-Madison/Extension health policy specialist says the law does not help those who currently are uninsured -- as many as 40 million Americans. Nor does it guarantee that the health insurance offered will be at an affordable price.

"The real sticking point is what the cost of the insurance will be," said Roberta Riportella-Muller. "It is entirely possible that an individual or a small group will face premiums high enough to discourage buying insurance. Not many people are talking about this."

The new law, based on legislation drafted by Senators Edward Kennedy and Nancy Kassebaum, assures workers that when they change jobs they will still be eligible for health insurance and will not be excluded if they have a pre-existing condition.

It also guarantees that if a small business is insuring employees, it will have a guarantee of insurance renewal even if someone in the company gets sick.

While the bill was being drafted, there was talk of creating an administrative panel that would set limits on how much insurance companies could charge employees with a pre-existing condition. However, the new law makes no mention of any price caps on premiums.

Riportella-Muller said the bill also does not address access to insurance for the unemployed and uninsured or access to providers -- a real concern for many of Wisconsin's rural and inner city neighborhoods.

"This act is a small glimmer of what the health care reform debate considered," she said. "It deals with the question of portability and renewability, but leaves many other issues unanswered."

Key provisions of the bill include:

• Guaranteed health insurance access for small businesses that have 50 or fewer employees. Once an insurer sells a policy to any individual or group, it must renew coverage regardless of the health status of any member of the group.
• Guaranteed access for individuals. People who lose group coverage will be guaranteed access to coverage in the individual market.
• Workers covered by group insurance cannot be excluded from coverage for more than 12 months because of a pre-existing medical condition.
• Self-employed individuals can increase their tax deduction for insurance costs from the current level of 30 percent to 80 percent by the year 2002.
• Establishment of Medical Savings Accounts, which allow employees to put aside pre-tax dollars to pay for medical expenses.

One concern about this provision is that there is a likelihood that only the healthiest and wealthiest employees will risk putting money into these accounts, thereby increasing insurance premiums for those who continue to rely on traditional insurance policies.

The Medical Savings Account provisions take effect Dec. 31 of 1996. The insurance reform provisions are effective July 1, 1997.

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Last Updated: 5/1/02