THE WHITE HOUSE

Office of the Press Secretary

             PRESIDENT CLINTON ISSUES EXECUTIVE MEMORANDUM 
                  TO STOP HEALTH PLANS FROM VIOLATING 
                     KASSEBAUM-KENNEDY PROTECTIONS

                              July 7, 1998

Today, following the one-year anniversary of the implementation of the Kassebaum-Kennedy legislation, the President issued an Executive Memorandum directing the Office of Personnel Management (OPM) to take action to ensure compliance with the Kassebaum-Kennedy law. It requires health insurers to comply with the 1996 law in order to participate in the Federal Employees Health Benefits Program (FEHBP) and calls on OPM to take all actions necessary -- up to and including termination -- against insurers that violate the protections afforded by the Health Insurance Portability and Accountability Act (HIPAA). The President also announced that the Health Care Financing Administration (HCFA) and the National Association of Insurance Commissioners (NAIC) will forward any reports of violations to OPM, allowing the agency to take strong actions against these health plans.

There Have Been Reports That Some Health Insurers Are Circumventing Kassebaum-Kennedy Protections. The HIPAA law helps individuals keep health insurance when they change jobs, guarantees renewability of coverage, and guarantees access to health insurance for small businesses. According to the General Accounting Office, 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 also have reportedly delayed processing applications submitted by HIPAA-eligible individuals or small groups in order ensure that applicants have a sufficient break in coverage to lose eligibility for Kassebaum-Kennedy protections. Such actions are inconsistent with the letter and the spirit of the 1996 law.

Today, the President took strong action against insurers who violate the Kassebaum-Kennedy protections. Specifically, he:

Directed OPM to Ensure Health Plans Are In Compliance With Kassebaum-Kennedy to Participate in FEHBP. In order to be eligible to participate in the FEHBP, insurance carriers subject to HIPAA will have to certify in writing to OPM, which oversees FEHBP, that they are providing access to health insurance consistent with the HIPAA protections.

Directed OPM to Take Action, Up To and Including Termination, of Health Plans That Delay or Deny Coverage to Americans Eligible Under Kassebaum-Kennedy. To ensure compliance with HIPAA, the President directed the OPM to take all appropriate action -- up to and including termination of a participating health plan from FEHBP. 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 Americans eligible under the important 1996 law.

Directed HCFA to Report Any Abuses to OPM. The President also directed HCFA to report to OPM any actions taken by an insurer or insurer representative that in any way precludes or inhibits access to the insurance protections provided under HIPAA.

Announced Collaboration With the National Association of Insurance Commissioners (NAIC) to Help Stop Abuses. The NAIC has also committed to help identify and report to OPM any insurers they uncover who are denying or delaying providing individuals the Kassebaum-Kennedy protections.

Requested HHS and the Labor Department to report back within six months on the successes and obstacles to implementation of HIPAA.

These Actions Build on the President's Commitment to Ensuring That HIPAA Provides Millions of Americans Access to Health Insurance.

Directed HHS to Issue Strong Warnings Regarding Unacceptable Insurance Practices. Earlier this year, when the President first learned of efforts to circumvent the HIPAA law, he instructed the Department of Health and Human Services to take appropriate actions to stop health plans and their agents to cease and desist all such harmful and likely unlawful practices. HCFA responded by immediately releasing a strong guidance bulletin on March 18, 1998, to State Insurance Commissioners for distribution to insurers in each state. This bulletin advised insurers that delaying or denying health care coverage to Americans eligible for insurance under HIPAA was unlawful and inappropriate and it underscored the Federal Government's commitment to ensure compliance.

Fought Hard for Kassebaum-Kennedy Insurance Reforms in 1996. This act includes several other high priority Clinton Administration health initiatives, including:

• Eliminating the discriminatory tax treatment of the self-employed. Increased the tax deduction from 30 percent to 80 percent for the approximately 10 million Americans who are self-employed. The President also signed into law a provision to phase it in to 100 percent in the Balanced Budget Act of 1997.
• Strengthening efforts to combat health care fraud, waste, and abuse. The Kassebaum-Kennedy law created a new stable source of funding to fight fraud and abuse that is coordinated by the HHS Office of the Inspector General and the Department of Justice. In the first year alone, this effort saved the Medicare Trust Fund nearly $1 billion.
• Providing consumer protections and tax incentives for private long-term care insurance. This law also makes private long-term care insurance more affordable by guaranteeing that employer sponsored long-term care insurance will receive the same tax treatment as health insurance and implemented new consumer protections to ensure that any tax favored product meets basic consumer and quality standards.

Program of Participants:
Vice President Gore
Glenn Pomeroy, President National Association of Insurance Commissioners
President Clinton