The Politics Of The Health Insurance Portability And Accountability Act

T he Health Insurance Portability and Accountability Act of 1996 (HIPAA) could be the most significant federal health care reform in a generation. Called “Kassebaum-Kennedy” after its sponsors, former Sen. Nancy Kassebaum (R-KS) and Sen. Edward M. Kennedy (D-MA), the act creates the first national standards for the availability and portability of group and individual health insurance coverage, relies on the states as well as the federal government to enforce those standards, begins the development of federal policy for the electronic transfer of medical information, provides tax incentives to purchase long-term care insurance, increases the tax deductibility of health insurance premiums paid by self-employed persons, permits terminally and chronically ill persons to receive life insurance benefits taxfree, and strengthens federal authority to regulate health care fraud and abuse. HIPAA affects all working Americans and their employers, three federal agencies, and the governments of all fifty states. This is the first national health policy with such farreaching implications since the enactment of Medicare and Medicaid in 1965. The law makes significant changes in the Employee Retirement Income Security Act (ERISA), the Public Health Service Act, and the Internal Revenue Code. Taken together, these changes prohibit employers who offer coverage and the insurance industry from avoiding sick people. Through tax law, the changes also reduce financial barriers to care for persons who are self-employed and those with serious chronic and terminal illnesses. HIPAA enacts several concepts that were initially highly controversial but that gained wider acceptance through debate. Nevertheless, some health policy experts have concentrated not on what the act does but on what it does not do. The act changes neither how health care is delivered nor how it is financed. It does not increase access to health insurance for persons who are currently uninsured, nor does it give small businesses greater ability to join together to strengthen their purchasing power. Moreover, it does not make insurance more affordable by regulating the rates insurers and health plans can charge the insured. And it establishes a controversial experiment with medical savings accounts (MSAs). HIPAA does respond to major issues underlying the profound discontent that Americans have felt about their health care coverage. ERISA, for example, prohibited the states from regulating the health insurance of almost