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Guaranteed-Coverage Law May Hurt Some

By Jane Bryant Quinn
Sunday, September 29 1996; Page H02

Both President Clinton and Congress are praising themselves for reforming health insurance. And they have indeed taken a first step.

But the new guaranteed-coverage law isn't going to help everyone. Many workers are big winners. Others gain nothing. Some may be worse off, because their cost of coverage might go up.

You're a winner if you are now insured and take a new job at a firm that also provides a health plan. As long as you have had a policy for at least 12 months (18 months, if you enroll in the new plan late), your insurability will be guaranteed. You'll get immediate coverage under your new employer's plan, including coverage for illnesses you already had.

This protects workers who are burdened with heavy medical expenses. Maybe you have a chronic ailment such as diabetes; maybe you are pregnant, or your spouse is; maybe you are healthy but your spouse or one of your children isn't.

Such workers have been in "job lock." If they had changed jobs, their new company might not have covered those conditions right away. Under the new law, however, they will have to be covered. Group health plans will be changing their rules between July 1997 and June 1998.

The outlook is cloudier, however, for workers who leave a group plan entirely. Maybe you're joining a small firm that doesn't offer health insurance. Maybe you're starting your own business. You will need individual insurance, but you may not be able to find it if you are a high medical risk.

On paper, the new law solves your problem. Starting July 1, 1997 (or as late as July 1, 1998, depending on your state), you'll be guaranteed access to two or more individual policies.

But you will have to buy the insurance yourself. Family coverage normally costs about $4,000 to $5,000, and the price could double if you have a medical problem. If the average worker had that kind of money, there wouldn't be 40 million people uninsured.

Here's what the law will do next year, for workers who leave group plans and seek individual insurance:

You'll be offered a choice of individual policies with no waiting period for preexisting conditions, including pregnancy. To qualify, you must have been insured for the past 18 months, most recently under a group health plan.

If you haven't had 18 months of coverage, and seek individual coverage rather than a group plan, you get no protection under this law. You also get no protection if you've been without group insurance for more than 63 days. In these cases, you can still be rejected for coverage or denied insurance for preexisting conditions.

If you leave your job, and your company employs 20 people or more, you are entitled to benefits under the so-called COBRA law. That lets you keep the group health plan for up to 18 months, at your expense.

Once you've used up benefits under COBRA (or as soon as you leave your old job, if you don't have access to COBRA), you can turn to whatever coverage is provided in your state.

The states have several options for arranging guaranteed, individual coverage.

One possibility: taking you into the high-risk insurance pools that exist in 31 states. But that can cost you double the standard premium. "Most people who don't have health insurance say they don't because they can't afford it," says Drew Altman, president of the Kaiser Family Foundation in Menlo Park, Calif., a health policy research institute.

The states have other options. For example, they might require open enrollment periods, when health insurers have to take all comers. They might require group plans to offer individual policies to departing workers. Or health insurers might have to sell policies to all qualified buyers. Any requirement that insurers take all comers, regardless of health, would make individual policies more expensive, says Elizabeth Eynon-Kokrda, legislative issues consultant for Mutual of Omaha. How much more expensive depends on the type of coverage and on how the insurance company allocated its costs.

A big increase in price would drive healthy people out of those policies, says Dick Anderson, vice president of health policy for the HMO Kaiser Permanente. He thinks some insurers will try to skim off the better risks, making coverage even more expensive for those left behind.

This law does not guarantee you coverage if you want to switch from one individual policy to another; a group plan must be involved. And of course, it won't help the uninsured, whose numbers are increasing by 500,000 people a year.

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