GAO faults insurance rights law Coverage guaranteed but at what price?



WASHINGTON -- A 1996 law hailed as a way to guarantee health insurance for millions of Americans when they change jobs or lose coverage is not working as Congress intended, federal investigators say in a new report.

The General Accounting Office found that people who exercised their rights under the law often were charged premiums far higher than standard rates. And the GAO said that some companies discouraged insurance agents from selling policies to people with medical problems -- who were supposed to benefit from the law.

"Consumers attempting to exercise their right have been hindered by carrier practices and pricing," the investigators said.

Sen. Edward M. Kennedy, a co-author of the 1996 law with now-retired Sen. Nancy Kassebaum Baker of Kansas, said he was disappointed to see that it was not working as intended for people who leave jobs and try to buy insurance on their own.

The Kassebaum-Kennedy law guarantees that people losing group health insurance will have access to coverage in the individual insurance market, regardless of pre-existing medical problems.

But the GAO said many of these people "may effectively be priced out of the market" by premiums of 140 percent to 600 percent of the standard rate charged to healthy customers.

The GAO also said:

Some states, including California, have not passed all the laws needed to carry out the federal statute, and the federal government does not have enough money or personnel to fill the breach.

The federal regulations are unclear, so insurers do not fully understand their obligations.

Consumers lose most of their rights if they do not buy an individual insurance policy within 63 days of losing group coverage. But they are usually unaware of this.

Some insurers have redesigned their benefits to exclude coverage of specific illnesses or costly procedures for a specified period of time. These tactics defeat the purpose of the law.

Some companies have told insurance agents that they will not get commissions for selling policies to people with medical problems.

Pub Date: 3/17/98

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