Fear of Losing Health-Care Benefits Has Many Workers Locked Into Jobs

The hot economy has spurred millions of Americans to go into business for themselves or to jump to new companies offering higher pay or greater career challenges. But for untold numbers of other working people--including many with serious health problems--that kind of a switch is not an option.

Many of these immobile workers are caught in a health-insurance-related dilemma known as job lock. They are locked into their current jobs because they don’t want to risk losing their health-care coverage and, as a result, receive reduced benefits or be forced to change doctors. Worse yet, some of these workers could wind up with no employer-provided health insurance at all for themselves, their spouses and their children.

Although the issue is especially poignant for those undergoing care for severe health problems, it also is a worry for healthy people who don’t want to jeopardize medical benefits they might need in the future.

According to a survey of 1,002 American adults this year by the Washington-based Employee Benefit Research Institute, 27% reported that they or members of their immediate families have confronted job lock. That’s up from 13% in 1991.

The spread of these concerns comes despite celebrated 1996 health-insurance legislation--known alternately as the Kennedy-Kassebaum law, the Health Insurance Portability and Accountability Act or HIPAA--that some backers said would go a long way toward ending job lock.

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It was designed to prevent insurance companies or employers from denying health coverage to workers simply because they or their dependents had known medical problems, or “preexisting conditions.� Yet the law was narrowly written and guarantees the protection only to workers meeting a variety of criteria. Among other things, they must come from a group insurance plan and they need to have had benefits of some sort for at least 18 months, without any lengthy breaks in coverage.

Since its phase-in began in mid-1997, the law mainly has benefited workers moving from one company with group health insurance to another company with similar coverage.

If you’re in that situation, you now can move “pretty seamlessly and not have to worry that you’ll be denied access to group coverage because of your health status,� said Karen Pollitz, a health-care policy specialist at Georgetown University.

But what about people who want to buy their own health insurance because they have become unemployed, self-employed or gone to work for a company that provides no coverage? Many are eligible to buy 18 months of continued coverage under state or federal programs known as COBRA.

After that insurance is exhausted, however, things get dicey. HIPAA coverage is supposed to kick in next, but the law, unlike COBRA, does almost nothing to limit the costs that individual insurance customers pay.

As a result, “what the insurance companies are saying is, ‘Fine, I’ll offer you coverage,’ but they’re charging four to 20 times what they’d charge a healthy person,� Pollitz said. “They’re charging such high rates that nobody but a very wealthy person could afford them.�

Dean Rosen, policy chief for the powerful industry group Health Insurance Assn. of America in Washington, acknowledged that premiums for individual insurance buyers often are costly, although he said Pollitz’s estimates “sound high.� Still, he said the higher charges typically reflect the greater risk of insuring individuals with health problems. He faulted states such as California for failing to take steps to help insurers bring premiums down.

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The shortcomings are no secret to people like computer network engineer Dave Duncan, 45, a diabetic. After he was laid off from a Mountain View, Calif., company in 1996, he went into business for himself, buying continued health care coverage through COBRA.

But when that ran out in January and he tried to buy new coverage, Duncan was turned down--illegally, in his view--by one insurer. Another offered bare-bones coverage at a cost of almost $2,000 a month for him, his wife and three children.

After going without coverage for several months early this year, he found a way around the obstacles. He joined a nonprofit association that offers group health insurance to its members. He now pays $430 month to cover his family.

While that was a relief for him personally, Duncan sympathizes with others who aren’t as fortunate. “If you don’t have insurance in this day and age and something serious comes up, you can really be in a pickle,� he said.

Pollitz points out that California is one of 12 states that doesn’t impose any price controls on HIPAA policies for individual consumers. And California is one of only five states that have not adopted HIPAA standards to enable state authorities to police insurers and make sure they are not illegally denying coverage to consumers.

A pair of bills was moving through the Legislature last week that would give California that regulatory authority and impose price controls. But Gov. Pete Wilson is expected by many to veto the legislation, largely because of political differences over an additional provision in the package aimed at helping self-employed workers.

Times staff writer Stuart Silverstein can be reached by phone at (213) 237-7887 or by e-mail at [email protected].