Despite strong opposition by SIIA and other groups, harmful stop-loss legislation is passed out of California State Senate Health Committee

April 26, 2012 -- The Self-Insurance Institute of America, Inc. (SIIA) late yesterday told members of the California State Senate Health Care Committee that legislation now under consideration to impose new regulations on stop-loss is likely to be preempted by federal law and will therefore expose the state to litigation.

This message was delivered by SIIA Chief Operating Officer Mike Ferguson during a legislative hearing on SB 1431, which would prohibit stop-loss insurance with specific attachment points lower than $95,000 for companies with 50 or fewer employees. The bill also erroneously concludes that stop-loss insurance provides “coverage” for individual plan participants.

SIIA’s comments were supplemented by the California Chamber of Commerce and the California Health Underwriters, which also provided testimony at the hearing. Additional organizations that have joined SIIA in formal opposition to the legislation include the Health Care Administrators Association, National Federation of Independent Business and the Southwest California Legislative Council.

Testifying in support of the SB 1431 was the California Department of Insurance. Blue Cross/Blue Shield of California and SIEU, all contending that the legislation is needed to prevent stop-loss carriers from “cherry-picking” healthy groups and therefore will create adverse selection market conditions, which in turn will compromise the viability of California’s health insurance exchange when it is scheduled to come on-line in 2014. Additional organizations on record supporting legislation are California Association of Physician Groups, Consumer Federation of America and Health Access California.

The legislation ultimately passed out of committee on a party-line vote. It is not yet known whether it will be amended before moving to the Senate floor and Assembly for consideration.

To more efficiently communicate important ongoing developments regarding SB 1431and to engage the involvement of interested stakeholders, SIIA has launched a new Facebook page. Located at www.facebook.com/DefeatSB1431, this social media platform includes the full text of the legislation, comment letters, testimony, legislator contact information and media coverage on other items related to SB 1431. Those interested in these developments are encouraged to “Like” this page if you have not already done so.

Please watch for further original reporting on SB 1431 from SIIA as developments warrant. In the meantime, please contact SIIA Government Relations Director Jay Fahrer should you have any questions or comments. He can be reached at 202/463-8161, or via e-mail at jfahrer@siia.org.

Also in the meantime, you can read provocative commentary on the developments in California at http://self-insuranceworld.blogspot.com.