You Can't Take it With You

At a news conference in January, President Clinton declared proudly that the Health Insurance Portability and Accountability Act, better known as Kennedy-Kassebaum, "made it legal" for unemployed people and those changing jobs "to carry their insurance with them." Reporters didn't challenge his remarks or venture a single follow-up question, just as they didn't dispute similar assertions made last year when the bill, hailed as the best the country could do, wound its way through Congress.

The bill was named for its Senate sponsors, Democrat Edward Kennedy and Republican Nancy Kassebaum, now retired, and its health insurance provisions take effect July 1. Employees who think they can take their insurance to new jobs are in for a shock: they can't, despite what the media have told them.

After the resounding failure of the Clinton administration's effort at a sweeping overhaul of American health care, Kennedy-Kassebaum was meant to address one much-publicized aspect of the problem: making sure workers who lose or change jobs in a tumultuous time of mergers and downsizing do not lose their medical insurance coverage because of pre-existing health conditions. That is what the bill's sponsors and supporters set out to do. Through the largely unquestioning news media, they persuaded the public that the bill would somehow make health insurance "portable," in the catchword that became ubiquitous -- you lose your job, you take your insurance with you.

In fact, the law doesn't allow anyone to take his existing health insurance to a new job. It does make it easier for workers who had group coverage to get new insurance without satisfying a waiting period because of a pre-existing condition. But regardless of what the public heard or read repeatedly, only workers (or their dependents) with such conditions are affected by Kennedy-Kassebaum. And for workers who lose group coverage and need individual policies, the law sets up formidable hurdles. So far, says an aide to Congressman Pete Stark, a California Democrat active in health reform, "Anyone who calls this office falls outside the bill."

 Kennedy-Kassebaum was the perfect symbolic law giving the impression of solving a problem without doing much. During the debate, the insurance industry opposed efforts to make it easier for people who lose group coverage to buy individual policies. The industry argues that those people tend to be sicker and buy coverage because they need it immediately -- exactly the group companies don't like to insure. But as a concession to insurers, the law does permit states to use their high-risk pools -- mechanisms in which carriers in a state agree to pool resources, sometimes with state money added, to furnish coverage for unhealthy people. Insurance carriers generally like this approach because the pool policies tend to provide less coverage and carry higher premiums than conventional policies, effectively keeping people out of the market. Many pools also restrict the number of people who can get insurance.

 As an alternative to the risk-pool approach, Kennedy-Kassebaum allows -- but does not require -- states to comply with federal standards that prescribe what policies a carrier must offer. Under those standards, an insurer must offer every individual policy it sells in the state, or the two most popular plans offering different levels of coverage.

During legislative maneuvering, the risk-pool solution for insuring the sick largely escaped media analysis. In April of last year, John Judis in The New Republic diagnosed the dangers of risk pools. "Senate and House sponsors have left a loophole in their bills to allow private insurers to evade their responsibility for insuring individuals with pre-existing conditions," he wrote, adding that risk pools are "bogs of fiscal insolvency." In October and December, Judis again tackled the subject, and again there was virtually no media follow-up.

Nor did the media pay much attention this spring to legislative action in the states, where insurance industry lobbyists roamed the capitols trying to establish risk pools -- and not the federal standards -- as the way to comply with the law. "Risk pools do an end-run around Kennedy-Kassebaum," says Brian Atchinson, Maine's insurance superintendent. "The media certainly didn't focus on the trench warfare taking place in the states to minimize the benefits of the law."

 In Oklahoma, for instance, as of late May, The Daily Oklahoman, the Tulsa World, and even The Journal Record, which covers local business, did not cover a legislative debate over implementing Kennedy-Kassebaum. A state senator tried to put the brakes on a bill mandating risk pools and raise the possibility of using the federal options. "I had no press calls on this," says Senator Angela Monson, who represents Oklahoma City. "This is major health legislation. The implications can be far-reaching and long-lasting." One of her concerns: former welfare recipients who've lost Medicaid benefits and have to approach the risk pool for coverage, where the price can be 50 percent above the standard premium in the state -- no doubt out of reach for many now moving into minimum-wage jobs.

By the end of May, twenty states, including Oklahoma, had opted for risk pools and twenty for other alternatives.

If the media overstated the effects of Kennedy-Kassebaum, they also inflated the number of people affected, and took at face value the claim made by Clinton, Kennedy, and others that 25 million people would benefit. That number, from a General Accounting Office report, assumed that all workers who changed jobs had a family member with a health condition that made him or her unacceptable to insurers, an unlikely proposition at best. In fact, according to a Commonwealth Fund/Kaiser Family Foundation study, only about one million people are unable to buy health insurance because of pre-existing conditions. "I don't think anyone dug into what was behind the 25 million," says Dr. Karen Davis, president of the Commonwealth Fund, a philanthropy based in New York that specializes in research on issues of health and aging. Among those informed, she said, "the word was 500,000 might benefit." U.S. News & World Report apparently wasn't sure which number to believe, telling readers that estimates of the number of people fected ranged from 1 million to 25 million.

Kennedy-Kassebaum was about much more than insuring a relative handful of people. Tucked into the measure were gifts worth millions to American Family Life Assurance Co. (AFLAC), the world's biggest seller of cancer insurance, and the American Medical Association, two of the largest contributors to congressional races. Yet the media spotlight hardly shone.

AFLAC's political action committee has contributed some $2 million to candidates at the federal level in the last ten years and often makes the Federal Elections Commission top-donor lists. With Kennedy-Kassebaum, the insurer succeeded in weakening protection built into a 1990 law aimed at ending the abuse in the sale of health insurance to the elderly. AFLAC's "dread disease" policies are unnecessary, and the 1990 law required companies selling such coverage to disclose on their policies: "This insurance duplicates some Medicare benefits." That language was meant to warn people not to buy the policies since the coverage is already provided by Medicare and Medicare-supplement policies.

 Kennedy-Kassebaum eliminated that language, instead saying policies "must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance." The new language suggests people can collect major benefits twice, but they can't. The language leaves them free to waste their money on "dread-disease" insurance.

American Health Line, an online health-news service, The Washington Post, and U.S. News ran stories about the weakened disclosure, with the Post noting that the provision's "low profile makes it more likely to survive as a technical correction in a complex health care overhaul." The profile was so low, the rest of the media seem to have missed it. (This spring, after AFLAC won a major victory in New York state, The New York Times played the story prominently. New York's insurance department announced plans to allow sales of "dread disease" policies in the state, where they had been banned for twenty-three years. AFLAC had campaigned vigorously for the change, spending more than $175,000 on lobbyists and campaign contributions, the Times reported.)

The American Medical Association prevailed on Congress to require the Department of Health and Human Services to issue advisory opinions to physicians who ask if a particular business practice, such as a referral fee paid by one health care provider to another, is legal. These arrangements can be highly lucrative for doctors. The Office of the Inspector General, which prosecutes Medicare kickback cases, says advisory opinions will make it easier for providers to evade anti-kickback statutes: a practice found legal for one doctor can become a kind of malleable template for others to copy, adding variations that are not legal. If challenged, the copycats can use the original opinion as a defense in an effort to avoid punishment.

 The Congressional Budget Office estimates that lost fines and penalties for violations of anti-kickback laws plus the extra expense of issuing opinions will cost the government nearly $400 million over the next five years. The AMA is one of the largest contributors to congressional races. From the beginning of 1995 until Kennedy-Kassebaum's passage last August, its political action committee gave more than $1.2 million to candidates for Congress. Contributions peaked during crucial negotiations on the bill.

In the spring of 1996, Health and Human Services Secretary Donna Shalala wrote a story in Roll Call, a twice-weekly newspaper that covers Congress, warning that the bill would weaken anti-fraud laws. UPI later moved a dispatch quoting a Justice Department official who made the same point. A NEXIS search suggests that no media organization picked up the UPI story or Shalala's views. "Reporting in the mainstream press was nonexistent," says Mac Thornton, chief counsel to the inspector general in Health and Human Services. "It's just too technical -- too arcane. There are no sound bites here." The best post-mortem of Kennedy-Kassebaum was done last fall by Ramon Castellblanch in In These Times, hardly a mainstream news outlet. Castellblanch is not even a journalist; at the time, he was a doctoral candidate in health policy at Johns Hopkins.

Kennedy-Kassebaum was not sound-bite journalism, and the sound bites it did produce got it wrong or didn't register. It was, however, the kind of incremental health legislation Congress is likely to enact in coming years -- highly technical, somewhat invisible, prone to overselling, and a repository for special favors for special interests.

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