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

10/01/1998

Contrast Groups

Small Group Market Analyses. Our proposed quantitative design components focus on before-after comparisons of an outcome of interest in a state or group of states. Because states differed in their regulations prior to the implementation of HIPAA, we look to form clusters of states that had a similar pre-regulatory environment and examine changes post-HIPAA within this cluster of similar states. Ideally, we also want to identify a control group of states which had pre-HIPAA regulations that matched or exceeded the HIPAA reform requirements. Changes that we observe in these states are a measure of secular trend in states that adopted new regulation in response to HIPAA. That is, by comparing the change in an outcome among states which adopted legislation to conform to HIPAA requirements with the change in states that did not need to do so, we can infer how much of the observed change is due to the legislation and how much to secular change. The central feature of our recommended evaluation design is therefore the identification of these state groups.

Table 1 presents our suggested analytic groupings for analyzing the effect of the HIPAA group insurance market reforms. Based on an analysis of the IHPS small group database, we identified groups of states in which the small group insurance market legislation lacked one or more of the HIPAA requirements and so required new state regulation to conform to HIPAA. For example, Alabama (shown as group A), is the only state that did not limit pre-existing conditions or require guarantee renewal or guaranteed issue of some group product in the pre-HIPAA period. Similarly, we have identified

a group of states (group B) which included some of the HIPAA requirements but lacked guaranteed issue. Group C includes states with pre-HIPAA requirements that required guaranteed issue, but only of a limited number of insurance products; HIPAA requires this of all products sold in the small group market.

Table 1.COMPARISON GROUPS FOR HIPAA SMALL GROUP ANALYSES

 

STATE REFORM PRE-HIPAA, 1996

 

 

Limits on Pre-ex conditions

Group to Group Portability

Guarantee Renewal

Guarantee Issue

Health Allowed As Rating Factor?

STATE GROUP

A. AL

NO

NO

NO

NO

YES

B. GA, IL, IN, LA, NV, NM, WV

YES

YES

YES

NO

YES

C. AK, AZ, CO, DE, ID, IA, KS,MS, MO,

YES

YES

YES

SOME PRODUCTS

YES

TN, UT, VA, WI, WY

 

 

 

 

 

D. CA, MN, TX

YES

YES

YES

YES

YES

SOURCE: IHPS SMALL GROUP DATABASE


Group D is our group of control states. It includes states that had adopted regulations that met the HIPAA minimum requirements prior to the federal legislation. Group D does not include all states that had passed small group legislation that met the HIPAA requirements. We hypothesize that the degree of premium rating restriction may be an important factor in premium change and stability of offer rates. Therefore, we choose control states that have rating restrictions that are comparable to the rate restrictions in our 3 groups of study states. Specifically, we look for control states that do not exclude health status as a factor in setting premiums in the small group market.

The basic analysis strategy then is to compare change in an outcome of interest in one of the state groups A, B, or C with change in the control states in group D. This difference is a measure of the effect of new legislation to meet the HIPAA requirement. For example, a contrast between states in Group B and D is a measure of the effect of guaranteed issue in the small group market. Contrasting states in Group C and D provides an estimate of the effect of requiring guaranteed issue of all products.

Individual Market Analyses. Table 2 presents comparison groups for analyses of the effects of the group to individual portability provisions of HIPAA. The objective is to find groups of states that have adopted a similar implementation strategy and had similar pre-HIPAA regulatory provisions in the individual market. We focus on the two implementation strategies that have been adopted by most states: the federal fallback standards or use of a state risk pool. We do not include other strategies for several reasons.

Table 2. COMPARISON GROUPS FOR HIPAA INDIVIDUAL MARKET ANALYSES

 

STATE REFORM PRE-HIPAA, 1996

 

 

Limits on Pre-ex conditions

Portability

Guarantee Issue

Rating Restriction

HIPAA Implementation

STATE GROUP

         

A. AZ, DE, MD, MO, NC, TN

NO

NO

NO

NONE

Federal Fallback

B. CA, CO

YES

YES

NO

NONE

Federal Fallback

C. AL, AK, AR, IL, MS, NE, OK, WI

NO

NO

NO

NONE

Risk Pool

D. CT, WY

YES

YES

NO

NONE

Risk Pool

SOURCE: IHPS INDIVIDUAL MARKET DATABASE


First, most of the states that have adopted more expanded guaranteed issue provisions than required by the federal standards had such legislation in place prior to HIPAA. Second, while there are several other alternative mechanisms in place, such as mandatory conversion, these are typically state specific. Thus, it is more difficult to generalize any findings. Any change we observe might reflect situational effects. When we have a larger group of states, situation specific effects can be assumed to average out over the group.

A problem in our comparison groups for the individual market analysis is that we do not have a good temporal control. Virtually all of the states that had adopted individual market reforms prior to HIPAA that met or exceed the HIPAA minimum requirements also had tight rating restrictions. Changes in these states will not reflect the effect of new access regulations, but will reflect the tight premium regulation in these markets. Therefore we do not believe that they serve as good controls for changes that would have occurred in the unregulated markets of states that have adopted the federal fallback or risk pool alternative to meet the HIPAA standards. Instead, the evaluation in the individual market will focus on contrasts between different models of HIPAA implementation in previously unregulated markets. This will not answer questions about overall effects of reform, but rather whether one model appears to have different access, premium, and employment effects than the other.

We present four comparison groups in Table 2. In addition to the HIPAA implementation strategy, we differentiate states based on their pre-HIPAA regulatory profile. In particular, we distinguish states that had some regulations limiting pre-existing condition exclusions in individual coverage and providing for portability in satisfying any such exclusions from those that did not.

Data Sources

Our suggested quantitative evaluation designs emphasize the use of the Current Population Survey. Timeliness is a critical factor in this recommendation. The March CPS, which includes information about insurance coverage, is typically available within 6 months of the interview period. Thus, the evaluator would be able to conduct quantitative analyses in late 1999 and early 2000 using the March 1999 CPS as the post-HIPAA measure. Most other data collection efforts would not begin to yield data to perform analyses until 2001 or later.

A disadvantage of the CPS for this purpose is small samples in some states. Thus, when a comparison group includes a small number of small states, the sample size will not be sufficient to produce reliable estimates. We discuss power to detect differences under the specific topics below. For comparisons that cannot be made using a single CPS, HCFA(now known as CMS) may wish to arrange for some longer term evaluation that would involve either pooling multiple years of post-HIPAA experience as measured by the CPS or using some of the other databases that we have described in Part III. Moreover, even when the contrast involves a number of states, our design will permit the evaluator to detect effects of HIPAA only if they are moderate or substantial. We do not present a design that would be able to reject the hypothesis that HIPPA has any, including very small, effects on the outcomes of interest. The magnitude of the effects that we can detect with our design are discussed in more detail below.

In addition to the CPS, some of our designs include other sources of data to address specific issues related to HIPAA and its implementation. These are described in section III where we lay out the proposed topics and specific designs.