Health Insurance Industry Reforms

The Need to Have Reforms

Before HIPAA, the medical insurance sector is complicated. As this sector changed, a lot of jurisdictions had viewed the ease of indirect access to medical service as the “unlicensed practice of medicine”. This resulted in several states enacting laws in order that businesses can provide health care benefits to workers as a tax-free benefit of employment.

Various states enacted diverse laws, and this impacted the amount charged for medical insurance, who was qualified for medical insurance, and if it was possible to have medical insurance across state boundaries. Health insurance providers didn´t help by launching exceptions for pre-existing conditions and restrictions on portability involving employment.

The distinctions between state legislation, and the business strategies of medical insurance firms, made it hard for small companies to make reasonably priced group health care plans. So, a lot of people could not get insurance coverage, or when they do, they were locked into a job simply because health benefits may not be accessible to them in case they resign and go work for another company.

The Kassebaum-Kennedy Act

In 1995, Senators Kassebaum and Kennedy introduced the Health Insurance Reform Act into Congress. Its goal was to give greater access to health care benefits, to give better portability of health care benefits, to give more security of health care benefits, to boost the buying power of people and small companies, and for other needs.

The Act (S.1028) did not suggest anything about better privacy and security of health care information, greater patients´ rights, or simplifying the flow of data. It was only after the integration of the provisions of a companion bill (HR.3103) into the Kassebaum-Kennedy Act that it had any likeness to the final release of the Health Insurance Portability and Accountability Act.

Nevertheless, when HIPAA was approved, the criteria governing health care information, patients´ rights, and the flow of data were not yet in place. The Privacy Rule was only published in 2002 and the Security Rule was published in 2003. In addition, it may likewise be contended that neither Rule was efficiently enacted until the publishing of the Omnibus Final Rule in 2013.

How HIPAA Made Health Insurance Reforms

The HIPAA brought in a federal floor of requirements that health insurance firms must comply with. The Act disallowed the exemption of persons with particular pre-existing conditions and stopped the automatic ending of coverage whenever workers changed work or had no employment.

The Act additionally overruled any state legislation forbidding businesses from working together to negotiate better insurance costs so as to increase the buying power of small companies. Nevertheless, there were problems regarding the financial outcomes of adopting HIPAA because of the price of health care for higher-risk persons and the lower premiums from small companies.

To resolve the problem that the higher costs of health insurance firms would be shouldered by businesses and people in the form of higher premiums, terms were added to the HIPAA to improve the effectiveness of claims processing (i.e., the Transactions and Code Sets Rule) and deal with abuse and scams in the health care sector to lower costs by health insurance companies.

About the Author

Elizabeth Hernandez
Elizabeth Hernandez is the editor of HIPAA News. Elizabeth is an experienced journalist who has worked in the healthcare sector for several years. Her expertise is not limited to general healthcare reporting but extends to specialized areas of healthcare compliance and HIPAA compliance. Elizabeth's knowledge in these areas has made her a reliable source for information on the complexities of healthcare regulations. Elizabeth's contribution to the field extends to helping readers understand the importance of patient privacy and secure handling of health information. Elizabeth holds a postgraduate degree in journalism. You can follow Elizabeth on twitter at