states have enacted “mini” COBRA laws similar to the federal law to provide individuals with extended coverage. Although the survivor, and not the former employer, must pay for the continued coverage, the rate may not exceed by more than 2 percent the rate set for the survivor’s former co-workers. Not all employees are aware of COBRA benefits and roughly one in five persons who are eligible for coverage claim it, although some studies suggest take-up is higher among individuals who are older and have health problems (Gruber and Madrian, 1993).

Many cancer survivors (and family members who hold the family’s health insurance policy) avoid changing jobs because they fear losing health insurance and other employment-related benefits. In one study, more than one-quarter (27 percent) of cancer survivors reported this sense of “job lock” (Short et al., 2005a). Congress tried to remedy this problem in 1996, enacting the Health Insurance Portability and Accountability Act (HIPAA)14 to improve the portability and continuity of health insurance coverage in private insurance markets and among employer-sponsored group health plans.

For people changing jobs, HIPAA added important protections. It prohibited employers and insurers from conditioning eligibility for health benefits on health status. In addition, it limited the imposition of preexisting condition exclusion periods and required credit to be given for continuous prior coverage. However, federal law does not require employers to offer health benefits nor, for the most part, does it require minimum standards for what must be covered under job-based health plans. As a result, cancer survivors who change jobs may still find the next job does not offer coverage, or offers a plan that does not cover all the health services and providers a cancer survivor may need.

HIPAA also limits the ability of insurers in the individual market to deny or limit coverage because of preexisting conditions such as cancer. This protection applies to people who are “HIPAA eligible,” that is, who have left job-based coverage, exhausted COBRA, and meet other requirements. However, the increased cost of premiums for portable insurance products and difficulties in implementing and enforcing the law have limited the value of these protections for consumers (GAO, 1997, 2000, 2001). Some of the limitations of HIPAA’s protections are outlined in Box 6-12.

   

more than 20 employees are required to make continued insurance coverage available to employees (and their covered spouses and dependents) who quit, are terminated, or work reduced hours. Coverage must extend to spouses and dependent children who would otherwise lose coverage due to the death, divorce, legal separation, or Medicare eligibility of a covered worker, and to children who attain the age of majority and lose dependent status.

14  

HIPAA was signed into law as Pub. L. No. 104–191 on August 21, 1996.



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