Health Insurance in Transition: The Health Insurance Portability and Accountability Act of 1996

The Health Insurance Portability and Accountability Act (HIPAA)of 1996 (PL. 104–191) brings the federal government fullyinto insurance regulation for the first time. Despite the Republicanmajority's rhetoric about state control, election-year politicstrumped federalism. HIPAA's immediate impact oncoverage maybe modest, but its ultimate significance is great because itcreates a template for more farreaching federal involvementin regulating insurance. HIPAA amends the Employee RetirementIncome Security Act (ERISA), the Public Health Service Act,and the Internal Revenue Code, creating a complicatedstructuredictated by efforts to avoid an unfunded mandate. The historyof insurance regulation and the activity surrounding the enactmentof PL. 104–191 suggest that HIPAA continues an incrementalprocess of transition between state insurance regulation andfederal oversight driven by recent and accelerating changesin the structure of the health-care marketplace.