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Full Article (html) INTRODUCTION The burden of providing health insurance to unhealthy, high-cost medical consumers in the United States is a major social issue. The Health Insurance Portability and Accountability Act of 1996 (HIPAA)1 requires states to provide state-guaranteed coverage for individuals unable to secure coverage in the private health insurance market. In response, states have used four different approaches to finance health care for medically uninsurable individuals. This article analyzes these four approaches and their effects. Studies show that one in four men and one in five women will develop cancer, have a heart attack, or suffer a stroke before age 65.2 In most cases, having one of these three medical conditions disqualifies an individual from being able to obtain health insurance in the private market. These conditions also are on most state lists of “qualified preexisting conditions” that qualify an individual as “medically uninsurable,” as states assume that individuals with these conditions will be unable to obtain private health insurance coverage. Furthermore, even if an individual with one of these medical conditions is able to secure coverage, that person’s premiums are significantly higher than premiums for a healthy individual of the same age. A study published in February of 2005 reported findings of an investigation of 1,771 personal bankruptcy filers in five federal courts and 931 in-depth interviews. Approximately half of these bankruptcy filers cited medical cases as a reason for their bankruptcy: between 1.9 and 2.2 million Americans (filers plus dependents).3 The study also reported that 75.7% of the group driven to bankruptcy had employer-sponsored health insurance when they first became ill. Medical bankruptcies had increased by a factor of 23 between 1981 and 2001 and continue to increase.4 In response to the rapidly rising demand and need for health care for medical uninsurables, Congress created a federal obligation that requires states to provide affordable coverage for their unhealthy citizens.5 HIPAA set federal standards for preexisting condition clauses; by 1995, 36 states had enacted some form of HIPAA-equivalent state reform.6 As of 1999, 28 state governments had chartered nonprofit health insurance plans to accomplish the social goal of assuring access to necessary, quality medical care without the disruptions and negative side effects common to the private health insurance industry.7 Currently, as a result of HIPAA, every state provides some type of guaranteed coverage for residents who cannot get coverage either because they have a preexisting condition which prevents them from getting coverage in the private market or because they are very poor to the extent that they are unable to afford the premium for health insurance. This article addresses the following questions: What is HIPAA-eligibility and how does it apply to the medically uninsurable? What four methods have states utilized to provide health insurance to medical uninsurables? What results have states reported as a result of utilizing these methods to provide subsidized health care to medical uninsurables? Finally, which method is the most economically efficient and least socially damaging way to provide care to medical uninsurables?
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