KASSEBAUM/KENNEDY: STATES MOVE TO COMPLY WITH LAW

      In a unique regulatory arrangement, each of the 50 states
 will be allowed to implement the group-to-individual portability
 provision of last year's Health Insurance Portability and
 Accountability Act within the framework of federal guidelines. 
 The law was designed to achieve the goal of increased individual
 access to health insurance without a blanket guaranteed issue
 mandate, which was vocally opposed by the health insurance
 industry.  The impact of the law -- and how far states will have
 to go to meet it -- will vary considerably from state to state. 
 At one end of the spectrum, states that have guaranteed issue and
 renewal for the individual market may already be in full
 compliance or may only have to tinker with their insurance codes. 
 Similarly, states that have an established high-risk insurance
 pool would only have to change the eligibility requirements to
 comply with the Kassebaum/Kennedy mandate.  On the other hand,
 states with little individual-market reform and no existing high-
 risk pool may have to undertake major reforms to come into
 compliance with the law.
      SURVEY SAYS:  American Health Line's informal survey of all
 50 states as their April 1 deadline to notify the Health Care
 Financing Administration of their compliance plans approached
 found that states' strategies largely mirrored their existing
 insurance reform efforts.  More than half the states plan to
 either modify their high-risk pools or existing guaranteed issue
 or mandatory group-to-individual conversion laws.  Few states
 that do not already have existing guaranteed issue or mandatory
 conversion laws, however, plan to institute them, primarily due
 to strong state insurance industry opposition to the creation of
 new mandates.  In total, 15 states plan to comply with
 Kassebaum/Kennedy through guaranteed issue/mandatory conversion
 laws.  Of those states, 10 believe they are in compliance with
 the law except for minor changes in the definitions of small
 groups, preexisting conditions and credible coverage.  In fact,
 Washington state believes that is so far ahead of
 Kassebaum/Kennedy in terms of individual reform that it plans to
 roll back some of its requirements.  
      CHANGES:  Five states -- Arkansas, Georgia, Virginia,
 Florida and Nevada -- plan to make major changes in individual
 insurance law to comply with Kassebaum/Kennedy.  Arkansas will
 institute guaranteed-issue and renewal and will also alter its
 comprehensive health insurance pool (CHIP) to meet the individual
 portability mandate.  Nevada plans to adopt the National
 Association of Insurance Commissioners' (NAIC) Small Employer and
 Individual Health Insurance Availability Model Act.  A bill has
 been passed in Virginia and is awaiting Gov. George Allen's (R)
 signature that would require guaranteed issue in that state's
 individual market.  Insurers in the state lobbied against the
 bill but were pacified by a promise from the state to study the
 feasibility of creating a high-risk pool if the law disrupted the
 individual market.  Both Florida and Georgia will attempt to
 split the burden of the law between group and individual
 carriers:  Mandatory group-to-individual conversion will be
 required for people coming out of non-ERISA plans, while
 guaranteed issue will be required for self-insured plans.  
      EVERYONE IN THE POOL:  The modification of existing high-
 risk insurance pools appears to the most popular way that states
 plan to comply with Kassebaum/Kennedy; 19 states are pursuing
 this option.  Most of these states will need to modify
 preexisting coverage and residency requirements as well as other
 specific pool requirements to allow federal eligibles to enroll;
 some plan to add new policies or sections specifically for
 Kassebaum/Kennedy enrollees.  Connecticut will change the rules
 for its 20-year-old high-risk pool to make all enrollees subject
 to Kassebaum/Kennedy requirements.  New Mexico's proposal would
 repeal the June 30, 1998, sunset date for the state's Health
 Insurance Alliance as well as expand eligibility for its CHIP
 program.  The same bill would also repeal the state's mandatory
 community rating provision.
      EVERYONE FALL BACK:  Kassebaum/Kennedy contains a default
 guaranteed issue "federal fallback" provision that will apply to
 states that do not have an alternative mechanism certified by
 July 1.  Under the fallback, insurers that write coverage in the
 state's individual market must offer coverage to all eligible
 individuals.  Each carrier must offer a choice of two policies: 
 either their two most popular plans or a high-cost/low-cost plan
 option.  Eight states have opted to choose the federal fallback
 option and to develop state statutes that will allow them to
 implement and administer it.  According to Marc Thomas, head of
 HCFA's Insurance Reform Implementation Task Force, outcomes will
 vary in each state.  "The federal fallback position has a great
 deal of flexibility as long as the states meet the desired
 effect," he noted. 
      OPEN ENROLLMENT:  By far, the least popular option to meet
 the Kassebaum/Kennedy individual portability mandate is open-
 enrollment by one or more carriers.  Only three states appear to
 be pursuing this option:  Ohio, Pennsylvania and Michigan.  Ohio
 will tweak its existing open-enrollment system to address the
 issue of credible coverage.  Both Michigan and Pennsylvania plan
 to comply with the mandate through an open-enrollment mechanism
 built around their private insurers of last resort.  
      STILL IN THE WORKS:  Finally, there are states that still do
 not know exactly how they will comply with Kassebaum/Kennedy. 
 According to a spokesperson for the Missouri Department of
 Insurance, the state did not plan to submit anything to HCFA by
 April 1 because it could not meet the timeline.  He said that
 while the state is working on a compliance plan that will be
 submitted sometime after April 1, Missouri may also decide to go
 with the federal fallback.  If the state does submit something
 after April 1, HCFA would have 90 days to notify the state if the
 plan was not acceptable.  If the plan is not certified by July 1,
 the fallback position would automatically take effect.  A bill
 has been submitted to the Missouri Legislature that would provide
 state health insurance pool coverage for individuals who are
 rejected by insurers.  In California, Kassebaum/Kennedy
 compliance has sparked a political battle between the Wilson 
 administration and Democratic state legislators over the extent
 of individual insurance reforms in the state.  A total of six
 bills have been introduced in the state Legislature that run the
 gamut from Gov. Pete Wilson's (R) minimal compliance approach to
 more sweeping reforms.  As the April 1 deadline neared,
 negotiations over a final package were still underway.  Also as
 the deadline approached, the Delaware Legislature's Insurance
 Committee continued to examine its compliance options.  Some of
 the nation's most aggressive individual market reformers,
 however, will be conspicuously left out of the Kassebaum/Kennedy
 picture, at least for now.  Kentucky has received an exemption
 from the group-to-individual portability requirements until July
 1998 because its Legislature is not in session this year. 
 Massachusetts has applied for a waiver exempting it from the
 provisions because it feels that its current individual market
 reform efforts are more effective and that the state needs to
 maintain autonomy. (This article was written by Patricia Miller
 with reporting assistance from Bryan Courtright, John Budetti,
 Lee Ann Runy and Lyn Massey.)
      ONLINE UPDATES:  To find out how individual states are
 choosing to comply with the Kassebaum/Kennedy group-to-individual
 portability mandate, visit American Health Line's state update
 page at:  http://www.apn.com/ahlstate.
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