KASSEBAUM-KENNEDY: GAO Report Raises Concerns
The 1996 Health Insurance Portability and Accountability Act, also known as Kassebaum-Kennedy, "is not working out the way it was planned," the AP/Hartford Courant reports (Meckler, 3/12). According to a General Accounting Office report conducted for Senate Labor and Human Resources Committee Chair Jim Jeffords (R-VT), consumers exercising their right under the Kassebaum-Kennedy law to buy individual policies when they lose group coverage are being "hindered by carrier practices and pricing and by their own misunderstanding of this complex law." In the 13 states that first brought their insurance laws into compliance with Kassebaum-Kennedy, the GAO reported that some insurance companies are charging 140% to 600% more for group-to-individual policies than standard policies. Click here to download a PDF version of the report (3/10). While "the law required insurance companies to sell the policies, it did not guarantee that the policies would be sold at reasonable prices," the AP/Courant notes (3/12).
Told Ya So
The Los Angeles Times reports that the Kassebaum-Kennedy law was "[o]verwhelmingly approved in both the House and Senate" and was "hailed as a bipartisan victory when President Clinton signed it in August 1996" (3/12). But "[g]roups that criticized the original law for guaranteeing coverage without setting price limits were quick to point to [the GAO] report as justification of their fears," CongressDaily/A.M. reports. "This proves once again that the issue is not access, the issue is affordability," said Gail Shearer, director of health policy analysis for Consumers Union (3/12).
Is 600% Too Much?
The GAO report found "carriers charge higher rates because they believe individuals who attempt to exercise [the law's] individual market access guarantee will, on average, be in poorer health than others in the individual market" (3/10). The AP/Courant reports that providing coverage for consumers in "poorer health than others" is a "losing proposition" for insurers because "the chances are good that the companies will end up paying more for their medical care than the customers pay in premiums." American Medical Security lobbyist Amy McGee Polaski said, "We've taken every possible precaution to keep our rates low for our customers. When the government mandates that we do things, it doesn't give us a lot of room." Insurance companies do not want the premiums for their standard policies to increase just because of the new law, said American Community Mutual Insurance Co. Vice President Jack Martin. "[A]s long as it's not illegal," insurers who charge higher premiums for group-to-individual coverage "are taking full advantage of the law," he said. The GAO also found that some insurance companies "are discouraging their agents from writing the high-risk policies by reducing or eliminating commissions," according to the AP/Courant. American Community "wrote its agents a memo informing them that they would no longer be paid commissions for high-risk policies guaranteed under the law" (3/12).
On The Hill
CongressDaily/A.M. reports that Jeffords scheduled "an oversight hearing" on the GAO's report for next Thursday. This issue, and "other areas of confusion for both insurers and state regulators" may have to be "revisit[ed]," said Jeffords (3/12).