Employer-sponsored coverage is the predominant source of health insurance in the United States. In 2001, 67 percent of all nonelderly adults (over 118 million) and 64 percent of all children (46 million) obtained health insurance through an employer (see fig. 1). Nearly all large firms and almost half of smaller firms offer health insurance coverage for their employees. Federal tax laws provide incentives for employers to pay some or all of the premiums because their contributions are tax deductible as a business expense; the employer-paid portion of the premiums is also not considered taxable income for employees. Although the share of the premiums paid by employers varies with the size of the firm and the type of health plan, firms pay an average of more than 80 percent of the premiums for single coverage and more than 75 percent for family coverage. Also, for many individuals, the premiums for employment-based insurance are lower than those in the private market for comparable individual coverage. Low-income individuals without access to employer-based insurance coverage may qualify for Medicaid or SCHIP. These public insurance financing programs covered over 40 million low-income people at a cost of about $232 billion in federal and state expenditures in 2001. Established in 1965, Medicaid is a joint federal-state entitlement program that finances health care coverage for certain low-income individuals. Medicaid eligibility is based in part on family income and assets. States set their own eligibility criteria within broad federal guidelines. For example, states vary in the kind and amount of income they exclude from consideration when determining eligibility. Similarly, while some states set a ceiling on the value of assets—such as cars, savings accounts, or retirement income—that individuals may have available to them in order to be deemed eligible for Medicaid, other states have no asset test for eligibility. To the extent that asset tests are present in a state’s Medicaid program, individuals would need to “spend down” or dispose of their assets to become eligible for Medicaid. More than half of the individuals enrolled in Medicaid are children. Federal law requires states to provide Medicaid coverage to children age 5 and under if their family income is at or below 133 percent of the federal poverty level and to children age 6 to 19 in families with incomes at or below the federal poverty. Most states have received federal approval to set income eligibility thresholds that expand their Medicaid programs beyond the minimum federal statutory levels for children. Medicaid eligibility for nondisabled adults is more limited. Federal law requires states to provide Medicaid coverage to pregnant women up to 133 percent of the federal poverty level, and mandatory eligibility for parents is linked to the Medicaid family coverage category established in the 1996 federal welfare reform law. At a minimum, federal law requires states to offer Medicaid coverage to parents in families that meet the income and other eligibility rules that the state had in place on July 16, 1996, for determining eligibility for welfare assistance. Nationwide, considerable variation in Medicaid eligibility thresholds for parents exists. For example, Alabama covers parents whose family income is up to 13 percent of the federal poverty level. At the other end of the spectrum, Minnesota covers parents with family incomes up to 275 percent of the federal poverty level. The Medicaid statute does not generally provide for mandatory or optional coverage of nondisabled childless adults. However, some states have received federal approval to expand their Medicaid programs to include coverage for some of them. In 1997, the Congress created SCHIP to provide health coverage to children living in families whose incomes exceed the eligibility limits for Medicaid. While SCHIP is generally targeted to children in families with incomes at or below 200 percent of the federal poverty level, each state may set its own income eligibility limits, within certain guidelines. As of January 2002, states’ upper income eligibility threshold for SCHIP ranged from 133 to 350 percent of the federal poverty level. Unlike Medicaid, which entitles all those eligible to coverage, SCHIP has a statutory funding limit of $40 billion over 10 years (fiscal years 1998 through 2007). Under SCHIP, states can cover the entire family—including parents or custodians of eligible children—if it is cost-effective to do so, meaning that the expense of covering both adults and children in a family does not exceed the cost of covering just the children. Similar to Medicaid, states can obtain federal approval of SCHIP expansions through a section 1115 waiver. While more than 85 percent of Americans obtain health insurance coverage from the private insurance market or public programs, 40.9 million nonelderly Americans (16.5 percent) had no health insurance in 2001. Approximately 75 percent of the uninsured nonelderly adults had jobs. Individuals working part time, for small firms, or in certain industries, such as agriculture or construction, were more likely to be uninsured (see table 1). Young adults, minorities, and low-income persons were also more likely to be uninsured. The percentage of uninsured is generally higher in the South and West and lower in the Midwest and Northeast (see fig. 2). Texas had the highest uninsured rate of nonelderly Americans (25.9 percent) of any state in 2001, while Iowa had the lowest (8.7 percent). From March 2001 to March 2002, the national unemployment rate increased 1.4 percentage points, from 4.3 percent to 5.7 percent, with nine states experiencing above-average increases. The largest percentage point increases occurred in Colorado (2.6), Oregon (2.5), and Utah (2.0) (see table 2). Across the six states we reviewed—Colorado, New Jersey, North Carolina, Ohio, Oregon and Utah—the greatest unemployment increases were generally seen in manufacturing, construction, and transportation and public utilities (see table 3). Unemployed individuals may be eligible for financial assistance through the Unemployment Insurance Program, a federal-state partnership designed to partially replace the lost earnings of individuals who become unemployed through no fault of their own. While program requirements vary by state, individuals eligible for unemployment insurance generally (1) have worked for a specified period in a job covered by the program, (2) left the job involuntarily, and (3) are available, able to work, and actively seeking employment. Most states provide a maximum of 26 weeks of benefits, although benefits in some states have been extended for an additional 13 weeks in times of high unemployment. Benefits are generally based on a percentage of an individual’s earnings over the prior year, up to a maximum amount. The national average weekly unemployment benefit was $254 in the first quarter of 2002, with benefits lasting an average of nearly 15 weeks. In the six states we reviewed, the weekly unemployment benefit ranged from $253.80 in Ohio to $327.15 in New Jersey (see table 4). Although many aspects of health insurance, including premiums, are regulated at the state level, two federal laws— the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) and the Health Insurance Portability and Accountability Act of 1996 (HIPAA)—established requirements designed to help certain individuals maintain health coverage after loss of employment. COBRA provided that firms with 20 or more employees offer former employees and their dependents the opportunity to continue their group coverage for at least 18 months. To qualify for COBRA benefits, former employees must have been covered by the employer’s plan the day before they stopped working at the firm. Former employees are eligible only for the health plan coverage that they received while employed. COBRA coverage is not available if the former employer discontinues health benefits to all employees, as in a company closure. While employers must allow COBRA-eligible former employees to continue receiving coverage under the employer’s group health plan, the employer does not have to pay for it. The former employee can be required to pay the full cost of the group health premium plus 2 percent, which is designed to cover the employer’s administrative cost of keeping the former employee in the plan. Based on data from a 2002 survey of employers, the average cost of COBRA coverage is approximately $260 a month for an individual and $676 a month for a family. Based on a survey of a national sample of 1,001 nonelderly adults, a recent study estimated that because of the cost of COBRA continuation coverage, “only 23 percent of employed, insured adults would be very likely to participate in the COBRA program if they lost their jobs.” Unlike COBRA, which provided the opportunity for individuals losing their jobs to continue their private group health insurance, HIPAA provisions guarantee certain individuals losing group coverage the right to purchase coverage in the individual market. HIPAA provides guaranteed access to health coverage for individuals who, among other criteria, had at least 18 months of coverage without a break of more than 63 days and with the most recent coverage being under a group health plan. HIPAA stipulates that states must either require health insurers to make certain of their policies available to qualifying individuals or use an “alternative mechanism” to offer them coverage. An example of an alternative mechanism is a state-sponsored high-risk pool, which offers comprehensive insurance coverage to individuals with preexisting health conditions who are otherwise unable to obtain coverage in the individual market or who may be able to obtain coverage only at a prohibitive cost. (Appendix I describes how the six states that we reviewed guarantee access to coverage under HIPAA.) As with COBRA, individuals bear the full cost of individual coverage received under HIPAA. Since HIPAA provides for coverage in the individual insurance market, in which premiums are generally based on the characteristics of the individual applicant, this coverage is likely to be more costly for many applicants for a similar level of coverage than premiums for groups, where risk is spread over all members of the group. The differences will be smaller in some states that have imposed restrictions on how much insurers can vary premiums based on an individual’s characteristics. The six states we reviewed had instituted various protections that might assist individuals who have lost their jobs in maintaining or obtaining health insurance. Unemployed individuals, however, generally bore the full cost of the premium. States did not have data on the number of individuals who lost their health insurance during the economic decline and thus, who could benefit from these protections, but did have data on the number of individuals using some of the protections. The six states we reviewed had in place a variety of protections, which were established prior to the economic downturn. Unemployed individuals, however, were generally responsible for bearing the full costs of purchasing health insurance. Key protections to assist unemployed individuals in maintaining health insurance coverage included: State-mandated continuation coverage, through which states require small businesses to extend their group health coverage to former employees and their families if the former employees pay for it; Guaranteed conversion, through which states require insurers to give eligible individuals the ability to convert their group coverage to an individual health insurance policy; Guaranteed issue, through which states require insurers to offer coverage to individuals who do not have access to group coverage or public insurance; and High-risk pools, in which states create associations that offer comprehensive health insurance benefits to individuals with acute or chronic health conditions. Table 5 indicates the extent to which the six states we reviewed had adopted such protections. Of the six states we reviewed, only Oregon assisted lower income unemployed individuals in paying for the cost of premium coverage. Previously funded solely with state resources, the program was unable to expand enrollment for nearly 3 years and had a significant waiting list due to budget constraints. However, in October 2002, Oregon received approval to expand this program using federal funds. Each of the six states that we reviewed had a health care coverage continuation law, which applied to employers with fewer than 20 employees and thus were not subject to COBRA requirements. While the states required that employers make health insurance coverage available to eligible individuals, the employers were not required to pay for this coverage. In New Jersey, North Carolina and Utah, eligible individuals can be required to pay up to 102 percent of the cost of the premium charged under their former employer’s plan (the full cost of the group health premium plus a 2 percent fee to cover the employer’s administrative costs) (see table 6). In the other three states, individuals may be required to pay up to the full cost of the premium, but no administrative fee may be added. Like COBRA, the state health care coverage continuation laws did not apply to companies that terminate coverage, such as when going out of business. Nationally, premiums for state continuation coverage averaged approximately $260 a month for an individual and $676 a month for a family in 2001, which equals 24 to 61 percent of the average unemployment benefit. Eligibility for, and the length of required coverage under, states’ continuation coverage laws were often more limited than under COBRA. While under COBRA individuals must only be insured the day before they stop working, five of the six states that we reviewed had more stringent requirements. They required individuals to have been continuously insured for the 3 to 6 months immediately prior to the separation from their job. New Jersey, Ohio, Oregon, and Utah required employers to offer a year or less of continuation coverage, compared to 18 months under COBRA and in Colorado and North Carolina. Once individuals exhaust their COBRA or state health care continuation coverage, they may become eligible to convert to an individual policy. Although the HIPAA provisions require states to ensure that eligible individuals can move from group to individual health insurance coverage, state guaranteed conversion is specific to an insurer. Four of the six states we reviewed (Colorado, North Carolina, Ohio, and Utah) required insurers to provide individual policies to eligible individuals previously covered under a group policy sold by their company. To be eligible for guaranteed conversion, individuals had to have been continuously insured by the group health plan, or its predecessor, for 3 to 12 months (depending on the state) prior to their application for conversion—requirements that are less stringent than the 18 months of prior continuous coverage under HIPAA. State laws on guaranteed conversion contained no maximum length of required coverage; as with other individual health insurance policies, beneficiaries could renew the policies as long as they agreed to continue paying the premiums and did not commit fraud. Individuals were responsible for the conversion plan premiums, which could generally be based on the demographic and health characteristics of the individual. Thus, individual coverage under conversion policies—for which individuals pay the full premium—was generally more expensive than group coverage especially for higher-risk individuals. Of the six states we reviewed, New Jersey and Ohio had “guaranteed issue,” which required insurers to offer coverage to all individuals in the state who were not eligible for group coverage or public insurance programs, if they were willing to pay for it. According to Ohio statute, insurers in that state could charge an individual up to 2.5 times the rate charged to another individual with a similar policy. In New Jersey, insurers were required to charge each applicant the same price for five standard plans, but monthly premiums varied by insurer. For a policy issued by a health maintenance organization (HMO) in New Jersey, with a $30 copayment per visit to the doctor, monthly premiums for single coverage ranged from $324 to more than $394, depending on the insurer, while premiums for the other standard health plans were more expensive. (A comparison of the five standard plans is in table 7.) In the four states we reviewed that did not have guaranteed issue laws, insurance companies could choose not to offer coverage to individual applicants and have few or no restrictions on what they could charge individuals based on their health status, age, or other factors. Three of the states we reviewed (Colorado, Oregon, and Utah) have established high-risk pools that served individuals with acute and chronic conditions. The high-risk pools in these three states began operation in the early 1990s and also served individuals eligible for coverage under HIPAA (see table 8). High-risk pools are subsidized. Because enrollees often have major health problems, medical claims costs are high and would exceed unsubsidized premiums collected from their enrollees. Oregon’s risk pool was subsidized by a fee assessed on insurers based on the number of people they cover. Utah subsidized the operation of its high- risk pool with state funds. Colorado used a combination of these approaches. High-risk pool premiums are higher than standard premiums for individual insurance paid by healthy applicants although not necessarily higher than a high-risk individual would be charged in the individual market if coverage were available. State high-risk pool laws generally capped premiums at 125 to 200 percent of comparable standard commercial coverage rates. Premiums varied based on factors such as age, geographic location, type of health plan, and deductible. One state, Colorado, provided a 20 percent premium discount to certain low-income individuals. Across the three states we reviewed that had high-risk pools, undiscounted premiums for nonelderly adults ranged from less than 10 percent to close to 100 percent of the average unemployment benefit in the state. Although Ohio, Oregon, and Utah collected data on the number of uninsured residents, none of the states that we reviewed had data sufficiently current to determine how many of their residents had lost health insurance during the recent economic decline. States’ knowledge of any changes in the numbers of individuals benefiting from the different states’ protections varied by option and the state, with data most often available for the three states’ high-risk pools. None of the states we reviewed tracked how many of its residents obtained health coverage through state-mandated continuation coverage. Of the four states that required insurers to offer conversion plans, only Utah tracked the number of policies issued but it did not have data current enough to determine whether usage increased during the current economic decline. New Jersey tracked the number of individuals receiving individual health coverage through its five standard plans. Enrollment in these standard plans declined in the past year, which a state representative attributed to the rising cost of coverage. Each of the three states we reviewed that had high-risk pools tracked enrollment in their pools. From March 2001 to March 2002, enrollment in high-risk pools increased by 47 percent in Colorado, almost 23 percent in Oregon, and 37 percent in Utah. But it is not clear how much of the increased participation came from the ranks of the unemployed. For example, a Colorado official said a large portion of the increased enrollment in the state’s high-risk pool was likely due to insurers leaving the individual and small group health insurance market in the state. Therefore, it is difficult to determine how much of the increase included those dropped from individual or nonemployer-based group coverage and how much included the newly unemployed. Given the cost of maintaining coverage under their former employers’ health insurance plan or obtaining alternative coverage, unemployed individuals may look to states’ Medicaid and SCHIP programs for coverage for themselves and their families. Unemployed adults, however, are less likely to qualify for these programs than their children due, in part, to less generous eligibility levels set for adults than for children. Colorado, Oregon, and Utah have recently received federal approval for waivers to expand eligibility for adults in Medicaid and SCHIP, which may increase coverage for unemployed individuals. In the wake of recent fiscal pressures resulting from the economic downturn, however, New Jersey has suspended its Medicaid and SCHIP coverage expansion for new applicants. Efforts by some states to expand Medicaid and SCHIP coverage for uninsured adults have raised significant federal fiscal and legal issues, at times providing adult coverage with funds intended for children. As unemployed adults seek health insurance, they will likely find it more difficult to secure coverage under Medicaid or SCHIP for themselves than for their children. Under Medicaid, the majority of states had set eligibility levels for nondisabled adults that were less generous than those for children. In the six states we reviewed, Medicaid’s maximum income eligibility levels for non-disabled adults were lower than the levels for children. In Colorado, New Jersey, North Carolina, and Utah, the maximum income levels for coverage for these adults were under 50 percent of the federal poverty level. In contrast, Medicaid and SCHIP coverage for children ranged from those in families with incomes up to 170 percent of the federal poverty level to those in families with incomes up to 350 percent of the federal poverty level (in Oregon and New Jersey, respectively). In four of six states, adults eligible for unemployment benefits might not have qualified for Medicaid because the average of their unemployment benefits would have been at least twice as much income as allowed for Medicaid eligibility. In the remaining two states—Ohio and Oregon— adults that received the average unemployment benefit would have met the income eligibility requirements for Medicaid in those states (see table 9). In Colorado, North Carolina, Oregon, and Utah, Medicaid coverage for unemployed adults was more restricted than it was for children because adults’ accumulated assets could have made them ineligible for coverage even after their unemployment benefits run out. The amount of assets allowed and the types of assets included for eligibility purposes varied by state (see table 10). For purposes of determining whether individuals reached or exceeded their asset limit, North Carolina included the cash value of life insurance, checking and savings accounts, and other investments, but excluded the value of an applicant’s primary residence and vehicle. Utah required that families with children over age 6 have assets below $3,000 (with allowances for an additional $25 in assets for each additional family member) but excluded the value of one home and of one vehicle, up to $15,200. In contrast, most states nationwide have eliminated family asset tests in determining Medicaid and SCHIP eligibility for children. As of January 2002, 44 states had eliminated family asset tests for all children in families with incomes at or below the poverty level and two other states dropped it for certain categories of children. Among the six states we reviewed, four states did not have asset tests for children in Medicaid, while five states did not have asset tests for children in SCHIP (see table 11). Among unemployed adults, childless adults often had more difficulty qualifying for Medicaid than parents. The Medicaid programs in Colorado, North Carolina, and Ohio did not cover any nondisabled childless adults. In New Jersey, childless adults faced a lower Medicaid income eligibility level than parents did. Oregon and Utah covered a small number of childless adults, all of whom earned less than 150 percent of the federal poverty level (see table 12). Some states have received approval from the federal government to expand Medicaid and SCHIP coverage for parents and childless adults, including recently unemployed individuals. Of the states we reviewed, Utah recently received a section 1115 waiver to expand Medicaid coverage to certain parents and childless adults for a benefit package limited to primary care and preventive services. Utah’s waiver is estimated to cover an additional 16,000 parents with family incomes under 150 percent of the federal poverty level and 9,000 childless adults with incomes under 150 percent of the federal poverty level. The expansion, implemented on July 1, 2002, is funded by enrollment fees and cost sharing by participants and savings from increased cost sharing and new limits on some optional services, such as mental health services, vision screening and physical therapy, for certain groups of currently eligible adults. On September 27, 2002, Colorado received approval to cover pregnant women with family income between 134 and 185 percent of the federal poverty level using SCHIP funds. Oregon also received approval on October 15, 2002, for a section 1115 waiver to expand insurance coverage for adults and children up to 185 percent of the federal poverty level using Medicaid and SCHIP funds. Oregon expects to cover an additional 60,000 individuals, but plans to phase in implementation of this expansion. On November 1, 2002, the state plans to expand its premium assistance program by paying between 50 and 95 percent of premiums for eligible individuals with incomes up to 185 percent of the federal poverty level, using both Medicaid and SCHIP funds. On February 1, 2003, Oregon plans to expand Medicaid and SCHIP eligibility to pregnant women and children with incomes up to 185 percent of the federal poverty level, and to other eligible individuals, including parents and childless adults, with incomes up to 110 percent of the federal poverty level. Further eligibility expansions may occur each quarter depending upon the availability of state funding. A state that has used a waiver to expand Medicaid and SCHIP coverage may be prompted by shortfalls in its budget to limit these expansions. Of the states we reviewed, in January 2001, New Jersey expanded Medicaid and SCHIP coverage for parents earning up to 200 percent of the federal poverty level. In June 2002, however, New Jersey suspended new enrollment of adults in this program, increased the premiums and reduced the benefits for those already covered under the expansion. New Jersey’s program had exceeded the state’s 3-year enrollment projection in 9 months. Section 1115 waivers to expand insurance coverage under Medicaid and SCHIP can extend coverage to adults who would not otherwise qualify and who would have difficulty obtaining coverage elsewhere. However, we reported earlier that some waivers are inconsistent with the goals of the Medicaid and SCHIP programs and may compromise their fiscal integrity. For example, in approving Utah’s expansion, we concluded that HHS did not adequately ensure that the waiver would be budget neutral as required for approval. We estimated that Utah’s waiver, if fully implemented, could cost the state and federal governments $59 million more than without the waiver. We found that the state’s projection of what it would have spent without the waiver inappropriately included the estimated cost of services for a new group of people who were not being covered under the state’s existing Medicaid program. Although we did not review Colorado and Oregon’s waiver applications in our earlier report, we raised a broader legal issue about states’ use of SCHIP funds to cover adults without children, which Oregon’s recently approved expansion will do. In our earlier report, we found that HHS had approved an Arizona waiver proposal that would, among other things, use unspent SCHIP funding to cover adults without children, despite SCHIP’s statutory objective to expand health care coverage to low-income children. In our view, HHS’s approval of the waiver to cover childless adults is not consistent with this objective, and is not authorized. Consequently, we recommended that the Secretary of Health and Human Services not approve any more waivers that would use SCHIP funds for childless adults. In addition, we suggested that the Congress amend the Social Security Act to specify that SCHIP funds are not available to provide health insurance for childless adults. Health insurance for the majority of Americans who rely on employer- based coverage could be threatened upon job loss. Federal and state laws provide some protections that are aimed at helping individuals maintain or obtain health insurance coverage in such circumstances. The protections offered, however, are not without limitations as individuals may find that bearing the full cost of the premiums—with no employer or state subsidies—may be beyond their financial means. While those who cannot afford health insurance may look to Medicaid or SCHIP for assistance, coverage for adults is hampered by limited income eligibility and other requirements, such as asset tests, that are likely to reduce the number of adults that can qualify for coverage. Some states have made recent efforts to use the flexibility available to them under Medicaid and SCHIP to expand their programs to help cover increased numbers of uninsured adults. Tighter budgets, however, are beginning to constrain some states’ ability to sustain insurance coverage expansions initiated during stronger economic times. Thus, despite program expansions, coverage under Medicaid and SCHIP may not be available to unemployed adults, while other state coverage options may be too costly for these individuals. We provided a draft of this report for technical review to representatives of insurance departments, high-risk pools, and Medicaid programs in the six states we reviewed. Each of the states provided technical comments, which we incorporated as appropriate. In addition, in its comments, Utah disagreed with our statement—based on findings in an earlier report—that HHS did not adequately ensure that the state’s section 1115 waiver met the budget neutrality test. The state contends that its waiver is budget neutral and is consistent with long- standing HHS budget neutrality practices. Since 1995, we have expressed concern that HHS’s methods for assessing budget neutrality allow the inclusion of certain costs that inappropriately inflate cost estimates and result in the federal government being at risk to spend more than it would have had the waivers not been approved. We believe that continued use of these methods is inconsistent with the long-standing requirement for section 1115 waivers to be budget neutral and inappropriately places the federal government at risk of increased cost for the Medicaid and SCHIP programs. We did not obtain comments from HHS on this report because we did not evaluate HHS’ role or performance with respect to protections or programs that may benefit unemployed individuals. As agreed with your offices, unless you publicly announce its contents earlier, we will plan no further distribution of this report until 30 days after its date. At that time we will send copies to other interested congressional committees and other parties. We also will make copies available to others upon request. In addition, the report will be available at no charge on the GAO Web site at http:// www.gao.gov. If you or members of your staff have any questions regarding this report, please contact me on (202) 512-7114 or Carolyn Yocom on (202) 512-4931. Other major contributors to this report include JoAnn Martinez-Shriver, Michael Rose, and Michelle Rosenberg. HIPAA provides guaranteed access to coverage—”portability” from group to individual coverage—to eligible individuals who, among other criteria, had at least 18 months of coverage without a break of more than 63 days. Recognizing that many states had already passed reforms that could be modified to meet or exceed these requirements, HIPAA gave states the flexibility to implement this provision by using either the federal fallback or an alternative mechanism. Under the federal fallback approach, insurers must offer eligible individuals guaranteed access to coverage in one of three ways. HIPAA specified that a carrier must offer eligible individuals (1) all of its individual market plans, (2) only its two most popular plans, or (3) two representative plans—a lower-level and a higher-level coverage option— that are subject to a risk spreading or financial subsidization mechanism. According to a 2002 report, 11 states opted for the federal fallback approach. Under an alternative mechanism, states may design their own approach to guarantee coverage to eligible individuals as long as certain minimum requirements are met. Essentially, the approach chosen must ensure that eligible individuals have guaranteed access to coverage with a choice of at least two different coverage options. For example, one possible alternative mechanism is a state high-risk pool. As shown in table 13 only one of the six states we reviewed relied on the federal fallback approach to ensure group-to-individual portability. The remaining states either relied on their high-risk pool, another alternative mechanism, or both. Medicaid and SCHIP: Recent HHS Approvals of Demonstration Waiver Projects Raise Concerns, GAO-02-817. Washington, D.C.: July 12, 2002. Health Insurance: Characteristics and Trends in the Uninsured Population, GAO-01-507T. Washington, D.C.: March 13, 2001. Health Insurance Standards: New Federal Law Creates Challenges for Consumers, Insurers, Regulators, GAO/HEHS-98-67. Washington, D.C.: February 25, 1998. Medicaid Section 1115 Waivers: Flexible Approach to Approving Demonstrations Could Increase Federal Costs, GAO/HEHS-96-44. Washington, D.C.: November 8, 1995.

Summary: The six states reviewed had in place a variety of protections, established prior to the economic downturn, to assist unemployed individuals in maintaining health insurance coverage: State-mandated continuation coverage, which required small businesses to extend their group health coverage to former employees and their families who choose to pay for it. Guaranteed conversion, which required insurers to allow eligible individuals to convert their group coverage to individual health insurance policies. Guaranteed issue, which required insurers to offer coverage to those who did not have access to group coverage or public insurance. High-risk pools, state-created associations that offered comprehensive health insurance benefits to individuals with acute or chronic health conditions. However, individuals usually bore the full cost of the premiums, which was usually higher than their premium cost under employer-sponsored plans. For individuals who relied on unemployment benefits as their principal income, premiums absorbed a significant share of the benefit.