Baseline Information for Evaluating the Implementation of the Health Insurance Portability and Accountability Act of 1996: Final Report. Background

10/01/1998

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) was designed to secure access to coverage for all employer groups and individuals that currently have health insurance. HIPAA requires that all group plans, including self-insured group plans, limit pre-existing condition exclusions and prohibit exclusion of individuals from a group health plan based on health status. In addition, health insurance issuers are required to guarantee renewability of coverage for all groups and guarantee issue all products for small groups. HIPAA also ensures that individuals who leave employment are able to maintain health insurance coverage. States must adopt an acceptable mechanism to provide a choice of health insurance plans to all individuals with 18 months of continuous coverage, the most recent under a group plan, and apply no exclusions on preexisting conditions, or require all insurers in the individual market to guarantee issue plans with no preexisting conditions exclusions to this population.

Thus, HIPAA ensures access to insurance for some employer groups and individuals who previously were unable to purchase health insurance or unable to purchase adequate coverage. What effect this will have on the number of uninsured or the prices people pay for insurance is, however, a matter of some uncertainty. Moreover, variability among states in insurance legislation just prior to HIPAA, and the flexibility that states are given to implement the individual market reforms suggests that the answer to these questions will vary from state to state.

DHHS has been mandated to report to the Congress on the effects of HIPAA. For Part II of this report, we conducted a literature review to identify important effects that DHHS will want to study to carry out that responsibility. The effects include changes in: health insurance coverage in the individual and group market, premiums in each market, carrier participation in the markets, health insurance product design, labor force participation (especially of older workers), and job mobility.

To monitor these changes will require information before and after HIPPA reforms. Moreover, because HIPPA was designed to ensure access to coverage for those who currently have difficulty obtaining coverage, DHHS will want to give specific focus to subpopulations—especially older workers, individuals in poor health, individuals in risky occupations, and employers considered to have high risk populations (older workers, certain industries). The evaluation will also require information on specific public policies in place prior to HIPAA. Many states had adopted reforms in the group and individual market prior to HIPAA; in these states the legislation would be expected to have less effect than in states which had previously imposed few restrictions on the group or individual market. This paper reviews databases that might provide the information required for the HIPAA evaluation.

We focus on databases that are national in scope or that cover a substantial number of states. There are some state specific sources of information that might be useful in evaluating state specific experiences. For example, Wisconsin, Oregon, Washington, and Arkansas are among states that have conducted population surveys to measure the number of uninsured. Some states—including Pennsylvania, Kentucky and California—have collected and tracked enrollment and premiums in the group and individual market. We have not included abstracts of these data sources because they often are not on-going efforts and hence will not provide a post-measure for evaluation. Furthermore, our empirical evaluation design focuses on examining changes in outcomes in groups of states that have similar pre- and post-reform environments. Measuring change in a single state may confound HIPAA and state-specific factors, whereas site-specific effects are averaged out over observations from multiple states. Thus, our database review emphasizes sources of information that are broader than a single state.