During the prolonged debate over health care policy in Washington, one of the few remedies that both Democrats and Republicans could agree upon was portability — the ability to take your health insurance from job to job. Although a simple bill requiring portability would have received bipartisan support, no such bill ever surfaced.
For those of us who think the states can solve many of our public policy problems far better than Washington can, Georgia has emerged as a shining example. In just three pages, Section Three of House Bill 616 solved one of the major health care problems facing Georgians by enacting portability. This law will provide peace of mind for the many people who live in fear of losing their insurance. A poll conducted by the Georgia Public Policy Foundation in December of 1993 found that three-fourths of Georgia voters were very concerned about losing their health insurance if they were to lose their job.
Since most people receive health insurance through their employer, when employees leave their job they also leave their health insurance behind. On their new job, employees usually experience a waiting period before their new group policy takes effect, during which time they remain uninsured. More importantly, if a person is found to have a health problem while applying for the new policy, the insurance company will almost certainly refuse to cover any expenses relating to the illness and may even use the illness as basis for completely denying coverage. In the language of insurance, this is called a pre-existing condition.
This new portability law, due to take effect in April of 1996, will go a long way toward solving these problems. The law ensures access to continuous health insurance for individuals who have been previously insured for 90 days or more. This will eliminate the gap in coverage most employees face after changing jobs.
In addition, exclusions for pre-existing conditions are not to exceed 12 months and the amount of time an individual has been previously insured counts toward this time limit. For example, if you were previously covered for seven months before you changed jobs, the new policy could only exclude a pre-existing condition for the first five months of your new job. Likewise, if your previous coverage had been in effect for one year or more, no pre-existing condition exclusions are allowed in the new policy. And you cannot be denied coverage altogether due to the condition.
Unfortunately, many small employers cannot afford to offer health care benefits. For their employees, as well those who choose to retire before they are eligible for Medicare, the new law guarantees access to an individual health insurance policy. Unfortunately, guaranteed access doesn’t mean much if an insurance company can increase premiums dramatically or cancel policies if their customers develop expensive health problems down the road. Luckily, existing Georgia laws governing individual health insurance policies prohibit premium increases or cancellation based on claims experience. In other words, an insurance company cannot change the rules of the game once the owner of an individual policy begins to file claims relating to an illness. After all, the purpose of health insurance is to protect individuals from the risk of financial loss due to an unexpected illness.
Due to the increased risk and administrative cost of issuing individual policies, insurance companies will be allowed to increase premiums slightly for those who move from a group policy to an individual policy. However, regulations related to the new law will be designed to limit this increase.
There is one caveat to the new law. Since many large employers are governed by the Employee Retirement Income Security Act of 1974 (ERISA), an individual employed by one of these firms is not guaranteed portability from their previous insurance. However, employees leaving or retiring from these firms are eligible under the law.
Overall, this law represents a tremendous step forward in health care reform. Georgians can now change jobs at will or retire without the fear of losing health insurance. By eliminating the need for people to go without insurance between jobs and by lowering the number of people who become uninsurable due to pre-existing conditions, the new law should dramatically reduce the number of uninsured individuals in Georgia.
Kelly McCutchen is the Executive Director of the Georgia Public Policy Foundation, an independent, nonpartisan organization dedicated to keeping all Georgians informed about their government and to providing practical ideas on key public policy issues. The Foundation believes in and actively supports private enterprise, limited government and personal responsibility.
Nothing written here is to be construed as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature. © Georgia Public Policy Foundation (July 1995). Permission is hereby given to reprint this article, with appropriate credit given.
During the prolonged debate over health care policy in Washington, one of the few remedies that both Democrats and Republicans could agree upon was portability — the ability to take your health insurance from job to job. Although a simple bill requiring portability would have received bipartisan support, no such bill ever surfaced.
For those of us who think the states can solve many of our public policy problems far better than Washington can, Georgia has emerged as a shining example. In just three pages, Section Three of House Bill 616 solved one of the major health care problems facing Georgians by enacting portability. This law will provide peace of mind for the many people who live in fear of losing their insurance. A poll conducted by the Georgia Public Policy Foundation in December of 1993 found that three-fourths of Georgia voters were very concerned about losing their health insurance if they were to lose their job.
Since most people receive health insurance through their employer, when employees leave their job they also leave their health insurance behind. On their new job, employees usually experience a waiting period before their new group policy takes effect, during which time they remain uninsured. More importantly, if a person is found to have a health problem while applying for the new policy, the insurance company will almost certainly refuse to cover any expenses relating to the illness and may even use the illness as basis for completely denying coverage. In the language of insurance, this is called a pre-existing condition.
This new portability law, due to take effect in April of 1996, will go a long way toward solving these problems. The law ensures access to continuous health insurance for individuals who have been previously insured for 90 days or more. This will eliminate the gap in coverage most employees face after changing jobs.
In addition, exclusions for pre-existing conditions are not to exceed 12 months and the amount of time an individual has been previously insured counts toward this time limit. For example, if you were previously covered for seven months before you changed jobs, the new policy could only exclude a pre-existing condition for the first five months of your new job. Likewise, if your previous coverage had been in effect for one year or more, no pre-existing condition exclusions are allowed in the new policy. And you cannot be denied coverage altogether due to the condition.
Unfortunately, many small employers cannot afford to offer health care benefits. For their employees, as well those who choose to retire before they are eligible for Medicare, the new law guarantees access to an individual health insurance policy. Unfortunately, guaranteed access doesn’t mean much if an insurance company can increase premiums dramatically or cancel policies if their customers develop expensive health problems down the road. Luckily, existing Georgia laws governing individual health insurance policies prohibit premium increases or cancellation based on claims experience. In other words, an insurance company cannot change the rules of the game once the owner of an individual policy begins to file claims relating to an illness. After all, the purpose of health insurance is to protect individuals from the risk of financial loss due to an unexpected illness.
Due to the increased risk and administrative cost of issuing individual policies, insurance companies will be allowed to increase premiums slightly for those who move from a group policy to an individual policy. However, regulations related to the new law will be designed to limit this increase.
There is one caveat to the new law. Since many large employers are governed by the Employee Retirement Income Security Act of 1974 (ERISA), an individual employed by one of these firms is not guaranteed portability from their previous insurance. However, employees leaving or retiring from these firms are eligible under the law.
Overall, this law represents a tremendous step forward in health care reform. Georgians can now change jobs at will or retire without the fear of losing health insurance. By eliminating the need for people to go without insurance between jobs and by lowering the number of people who become uninsurable due to pre-existing conditions, the new law should dramatically reduce the number of uninsured individuals in Georgia.
Kelly McCutchen is the Executive Director of the Georgia Public Policy Foundation, an independent, nonpartisan organization dedicated to keeping all Georgians informed about their government and to providing practical ideas on key public policy issues. The Foundation believes in and actively supports private enterprise, limited government and personal responsibility.
Nothing written here is to be construed as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature. © Georgia Public Policy Foundation (July 1995). Permission is hereby given to reprint this article, with appropriate credit given.