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July 7, 1998

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This is a moment of unsurpassed hope and opportunity. If we put aside partisanship for the sake of progress, we can give all Americans the health care protections they deserve and strengthen the nation for the 21st Century.

-President Bill Clinton
July 7, 1998

Today, President Clinton issues an Executive Memorandum directing the Office of Personnel Management (OPM) to take all necessary actions, up to and including termination from the Federal Employees Health Benefits Program (FEHBP), against health insurers of federal employees who do not comply with the protections afforded by the Health Insurance Portability and Accountability Act (HIPAA). In addition, the President announces that the Health Care Financing Administration (HCFA) and the National Association of Insurance Commissioners (NAIC) will forward any reports of violations to OPM.

Reports Show Possible Evasion Of Kassebaum-Kennedy. The HIPAA law helps individuals keep health insurance when they change jobs, guarantees renewability of coverage, and insures access to health insurance for small businesses. According to the General Accounting Office (GAO), HCFA, and press reports:

  • Some insurers are giving insurance agents incentives to avoid enrolling qualified Americans with pre-existing conditions who are guaranteed access to coverage under HIPAA;

  • Agents have reportedly delayed processing applications submitted by HIPAA-eligible individuals or small groups in order to ensure that applicants have a sufficient break in their coverage to lose eligibility for Kassebaum-Kennedy protections.

Presidential Action To Stem Abuse. Today, the President takes strong action against insurers who violate the Kassebaum-Kennedy protections, including:

  • Directing OPM To Ensure Health Plans Are In Compliance with Kassebaum-Kennedy in order to participate in the FEHBP. These health insurers will be required to certify that they are providing access to health insurance consistent with HIPAA protections;

  • Instructing OPM To Take All Action, Including Termination of health plans that delay or deny coverage to federal employees who are eligible for health insurance under Kassebaum-Kennedy. This action will help ensure that the 350 participating carriers in this program, who serve 9 million enrollees, are providing access to health insurance to all qualified Americans;

  • Directing HCFA To Report Any Abuses To OPM. The President is directing the HCFA to inform OPM of any actions taken by an insurer or an insurer's representative that in any way precludes or inhibits access to the insurance protections provided by HIPAA;

  • Announcing A Collaborative Effort To Help Stop Abuses. The NAIC has also committed itself to identifying and reporting to OPM any instances of insurers denying or delaying access to Kassebaum-Kennedy protections;

  • Requesting A Report In Six Months from the Departments of Labor and Health and Human Services measuring the successes and obstacles of implementing HIPAA protections.

Increasing Access To Health Care. The President has led the fight to assure HIPAA provides millions of Americans access to health insurance. When the President first learned of reports of insurers circumventing HIPAA, he instructed HHS to take appropriate action to stop health insurers from engaging in these forms of harmful and likely unlawful practices. HCFA responded immediately by mailing a guidance bulletin to all state insurance commissioners for distribution to private insurers. This bulletin advised insurance companies that denying or delaying HIPAA protections was unlawful and underscored the federal government's commitment to ensuring compliance. The President also fought for key reforms that were included in Kassebaum-Kennedy, including:

  • An increased insurance tax deduction for self-employed Americans from 30 to 80 percent, with a phase in to 100 percent under the Balanced Budget Act of 1997;

  • A coordinated effort by the HHS Office of Inspector General and the Department of Justice to combat waste, fraud, and abuse that has, in its first year, saved the Medicare Trust Fund nearly $1 billion;

  • Making private long-term care more affordable by guaranteeing employer sponsored long-term care is given the same tax treatment as health insurance;

  • Implementing new consumer protections to assure that any tax favored product meets basic consumer and quality standards.

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