Baseline Information for Evaluating the Implementation of the Health Insurance Portability and Accountability Act of 1996: Final Report. Effects of Hipaa’s Group Market Provisions


HIPPA’s group market provisions were designed to eliminate insurer practices that discriminate against employer groups and their members on the basis of health status, industry, or other characteristics. Redlining (that is, excluding specific types of businesses from coverage), denying coverage to employees with poor health or to their entire group, and excluding coverage for pre-existing conditions are documented practices that can pose barriers to employers (especially small employers) that wish to offer health insurance as a benefit (McLaughlin and Zellers, 1994; Zellers, McLaughlin, and Frick, 1992). HIPPA eliminates the first two practices in the small group market, and limits the exclusion on pre-existing conditions for all group plans. Proponents of these reforms believe that they will expand coverage; critics argue that they will lead to increases in premiums that might in turn lower access to coverage (Atchinson and Fox, 1997).

The research evidence on the effect of guaranteed issue, guaranteed renewal, guaranteed coverage for individuals, and pre-existing condition limits in group plans is scarce. But it suggests that these provisions have only small effects on premiums and coverage. Moreover, many states had already taken steps to eliminate discriminatory carrier practices and have standards that meet or surpass HIPAA standards. Thus, HIPAA imposes few new requirements in the group market. We review this evidence below.