Gannett News Service
WASHINGTON — After the fiasco that was health-care reform died ignominiously in 1994, legislators still itched to prove they could work together and provide some protection for Americans afraid of losing health insurance. In 1996, they hatched a plan.
Their narrowly tailored, bipartisan legislation was designed to prevent people with chronic health conditions from losing coverage as they changed jobs. The Health Insurance Portability and Accountability Act of 1996 — HIPAA — was passed with great fanfare, then disappeared into the ether.
The estimate of 25 million Americans the General Accounting Office originally said would benefit from the law never materialized. During the congressional debate over the legislation, the Congressional Budget Office scaled the number down to an average of 150,000 per year.
Today, only 20 states track HIPAA enrollment, and so far they report only 6,500 people enrolled in their high-risk insurance pools as a result of the law, according to a GAO report issued in May, the only one so far to analyze impact. Only two of those states have more than 1,000 HIPAA enrollees, the report said.
“Maybe there was no practical impact,” said Karen Pollitz, project director of Georgetown University’s Institute for Health Care Policy and Research, who has taken a close look at the law. “There may be no way to know.”
The Department of Health and Human Services has just published a request for proposals to study the impact of the plan, one indication it still may be too soon to tell what the law has accomplished. Most Americans were not covered until 1998.
“The fact that the government is putting this out suggests to me that there aren’t any answers yet,” said Stephen Long, a RAND Corp. researcher who designed a method to study the law.
The impact may be more generic than specific — affecting groups rather than individuals.
Many experts believe that employers and health plans changed their rules rather than deal with the brain-twisting complexities of the new law, opening coverage to more people sooner. The numbers are not in to prove that yet: the most recent data is from 1997, before the law affected most Americans, and at that time, the number of plans requiring a waiting period before coverage began was rising.
And it widely is agreed that the passage of HIPAA put the government — at the time still scarred from the debate over President Clinton’s plan and struggling to deal with political upheaval in the form of the first completely Republican Congress in 40 years — back into the health-care reform game.
It was the first use of a tactic that Congress and the president have been using with varying degrees of success ever since: peel off tiny, palatable slices of the health-care system and deal with their problems in a piecemeal, incremental fashion.
“This was a gridlock breaker, an ice breaker, as much symbolic as anything else,” said Jamie Court, co-founder of Consumers for Quality Care, a consumer advocacy group. “It was a face-saving measure for the Democrats and a symbol for the Republicans that they could change things.”
If you made a chart of the five major proposals pitched during the 1993-94 debate over health-care reform spearheaded by Clinton, HIPAA (pronounced hip-uh) would comprise the only column where the plans even came close to agreeing.
The original legislation had been approved by a Senate committee in 1995 but went nowhere until Clinton made very public note of it in his 1996 State of the Union address, adopting for the first time the role of legislative cheerleader — his role ever since.
HIPAA was advertised as a way to end job-lock, a situation where an employee won’t leave a hated job for fear of losing health benefits. In 1996, the GAO estimated between 1 million and 3.6 million Americans fit that description.
Under the law, so long as an employee has insurance at one job, he can keep coverage at his next job or shorten the waiting period. But there is no guarantee benefits would be the same or coverage affordable.
The law also requires states to make sure there is at least one place where anyone can go and be guaranteed coverage. Again, though, there is no limit on what a person can be charged for the policy, unless a state specifically sets limits on premium prices.
As predicted during the debate, this hit the individual market hard. People eligible for coverage through HIPAA — those with chronic medical conditions — now pay 300 to 464 percent more than the average rate for healthier customers, according to the GAO. About 15.5 million people now buy insurance on their own and not through an employer, but not all have to pay those high premiums.
“I don’t consider it a failure of HIPAA that people are having trouble in the individual markets,” said Joanne Hustead, director of legal and public policy for the National Partnership for Women & Families, which supported the legislation. “The law wasn’t for them. Group-to-individual was portrayed inappropriately as … where the problem was.”
The GAO report in May noted progress in implementing the law, but also had concerns about the prices in the individual market and consumers’ lack of knowledge about the law.
“Consumers commonly misunderstand the scope of HIPAA’s protections and its definition of portability,” the report said. Some think it guarantees that you keep the benefits from an old job after you take a new one; others think that it guarantees insurance for everyone, even those who have never had it.
It’s not hard to understand the confusion. Despite attempts by congressional leaders to keep the bill simple, the legislation wound up being remarkably complicated. Even Pollitz, who co-authored a state-by-state guide to the ins and outs of HIPAA, calls it a mind-bender.
“Our consumer guides are 1,000 pages long when you put them all together,” she said. “It’s staggering. It’s not reasonable for people to figure this out. It’s difficult for people who do this for a living.”
Most people don’t need to figure it out, because most people work for large businesses with insurance coverage, said Mark Hamelburg, an attorney with the consulting firm William M. Mercer. As a Treasury Department employee, he helped write the original HIPAA regulations.
“For most people, (the transition to a new job) is seamless,” he said. “I remember from the very beginning (the Labor Department) trying to dampen expectations. That doesn’t diminish the fact that for some people it provided benefits.”
A few experts believe that the true impact of the law may not be seen unless the economy takes a serious downturn again, causing people to be out of work for more than a few weeks and employers to cut benefits to save money.
In that kind of economy, job-lock returns, although not because a person has an existing medical condition. “Your next job doesn’t have coverage, or it’s a different plan, or you can’t afford to change networks,” said Pollitz. “Job-lock isn’t dead.”
The longest-term impact, and the one still visible today as Congress wrestles with a “patients bill of rights” to provide HMO customers with more protection from plan abuses, is the government’s willingness to tinker with small bits of the health-care system.
“It was really the first federal regulation of private health insurance, apart from Medigap,” said Marianne Miller, director of federal affairs for the Health Insurance Association of America. “It put a structure there that can be plugged into, and it paved the way for more federal regulation.”
Until HIPAA, health insurance was a segment of the economy largely run by employers and insurance plans and states. The government had jurisdiction over Medicare, for the elderly; Medicaid, for the poor; and companies covered by ERISA, which regulated benefit plans in businesses with operations in more than one state.
“There certainly was the sense by some that government could work, that some progress could be made,” said Richard Smith, vice president for public policy at the American Association of Health Plans, the managed-care industry’s trade organization. “Others were looking for a vehicle to reopen the health debate.”