Press Release February 11, 1997	Contact: Adrienne Mitchem, mitcad@consumer.org Gail Shearer, 202/462-6262 Consumers Union Washington, D. C. Office

Consumers Union Urges Congress To Heed Early Warning Signs That Threaten To Undermine Health Reform Bill

Washington -- In testimony before the Senate Labor and Human Resources Committee, Consumers Union, the nonprofit publisher of Consumer Reports, said that there are early warnings signs that the Health Insurance Portability and Accountability Act (HIPAA) may not achieve many of the benefits expected of it.

Consumers Union urged Congress to monitor the implementation of HIPAA carefully, and identified five areas for special focus: portability, long-term care insurance, medical savings accounts, niche insurance products sold to seniors, and criminalization of asset divestiture. "While this law holds the potential to help many consumers, it already is creating new problems for others," said Gail Shearer, CU's Washington Director of Health Policy Analysis.

Shearer added that, "The best way to minimize problems is for Congress and federal agencies to prevent unscrupulous insurers from exploiting consumers in order to line their own pockets."

The key areas of concern noted by Consumers Union are:

• Portability. Consumers Union identified the bill's portability provisions that help consumers both attain and hold onto health insurance, as perhaps the most important improvement that HIPAA makes in the health insurance market. The new protections, however, will fail to achieve their potential if, at the state level, the insurance industry is allowed to undermine existing state laws that limit premiums and provide access to insurance.
  
• Long-term Care Insurance. The HIPAA provision for tax deductibility for long-term care insurance has made a complicated market even more confusing for consumers. Consumers may have a choice between a "tax-qualified" policy that provides little long-term care coverage or a policy that is not "tax-qualified" but that provides comprehensive protection.
  
• Medical Savings Accounts (MSAs). MSAs have the potential to fragment the health insurance market, by appealing disproportionately to people who are healthy. Consumers Union urged Congress to monitor carefully the study of the impact of MSAs, and make sure that the Department of Treasury carefully counts MSA enrollees who were previously uninsured, so that the demonstration can be fully tested before it is allowed to expand.
  
• Niche Insurance Products Sold to Seniors. HIPAA opened the door to expanded sales of unnecessary, limited insurance policies sold to seniors. Consumers Union urged Congress to monitor this market carefully and consider eliminating the provision in HIPAA that undermines earlier efforts to limit the sale of policies such as cancer insurance and hospital indemnity insurance to seniors.
  
• Criminalization of Asset Divestiture. Consumers Union urged Congress to monitor the implementation of the provision that could put seniors who inadvertently violate the law into jail. This provision is leading to considerable alarm among seniors.

For a copy of the testimony, please contact Frances Gaeta or Camille Knox at 202-462-6262.