SIIA Helps to Shape High Profile Self-Insurance Story

August 3, 2012 – As further evidence that the brewing fight over stop-loss insurance regulation has gone “primetime,” provided below is an article highlighting current developments published yesterday by Politico Pro, which is widely read by members of Congress and their staff, as well as lobbyists, think tanks and policy-makers throughout the country.

SIIA’s Chief Operating Officer, Mike Ferguson was a key source for the article, refuting many of the criticisms of self-insured group health plans relative to health care reform implementation (on background), and pointing out that proposed state action to more tightly restrict the availability of stop-loss insurance is likely preempted by ERISA.

Without SIIA’s involvement, this article would have almost certainly taken a more negative slant on self-insurance.

This media involvement is part of a larger SIIA communications campaign to educate policy-makers about self-insured group health plans and the specific role of stop-loss insurance. Please watch for additional exclusive reporting from SIIA as this story continues to develop.

The Politico Pro article follows below.


THE SLEEPER HEALTH CARE BATTLE – Now that Congress has checked out for the next five weeks, it’s time we turn out attention to what’s happening on the ground as the implementation of the Affordable Care Act continues. We've had the Supreme Court and the ACA repeal vote, but here’s a new fight: self-insurance. It's not the kind of thing you'd expect to get people all riled up, but amid signs that more small businesses may self-insure, it's emerging as a sleeper battle to watch this month. The Obama administration and NAIC are examining tougher guidelines, and California's insurance chief is leading a high-profile effort to enact tougher standards in his state. Supporters of the health care law worry more small businesses will self-insure to shield them from some of the health law's new requirements, while the self-insurance industry argues that the plans will still be highly regulated under the ACA and other federal laws.

Focus on self-insurance for small businesses

By JASON MILLMAN | 8/2/12 4:45 PM EDT
In a summer dominated by health care fights, self-insurance is emerging as a sleeper battle to watch. Amid signs that more small businesses may self insure — which could effectively let them avoid complying with aspects of national health reform — the nation’s insurance commissioners are wrestling with new guidelines for stop-loss insurance that would mean small businesses would have to bear more of the self-insurance risk.

California’s crusading insurance chief is leading a high-profile effort to significantly raise the bar for self-insuring in his state while the Obama administration examines federal limits on self-insurance.

Some supporters of the health care law worry that more businesses will go the self-insurance route to shield themselves from compliance with some of the health care law’s new requirements. That would “have the potential to destroy the application of the Affordable Care Act as it applies to small business,” said NAIC consumer advocate Tim Jost.

The self-insurance industry dismisses those fears. Their representatives argue that self-insurance will still be highly regulated under the ACA and previous laws. In fact, they say, firms that opt to self-insure will expose themselves to two new Affordable Care Act taxes and fees on health plans.

“There are those out there, for whatever reason, who have a negative view of self-insurance,” said Mike Ferguson, chief operating officer of the Self-Insurance Institute of America.

The impending showdown has set off a lobbying blitz at the NAIC, which this month could update its stop-loss recommendations, and in California, where the legislature is gearing up for the final month of the session facing sharp disagreement over state Insurance Commissioner Dave Jones’s bill.

The NAIC’s current prescription for self-insurance sets the minimum “attachment point” — how much a self-insuring company would have to pay for an employee’s care before insurance kicks in — at $20,000. The group has considered tripling that standard, but it now looks poised to turn that $60,000 figure as guidance — which doesn’t bind the states.

While about half the states have some kind of stop-loss regulation — including three states that outright ban it — California’s Jones has angered business groups by pushing a bill that set $95,000 as the minimum attachment point. The business groups say that would essentially shut out small groups from the self-insurance market, and they accuse Jones of pushing small businesses into California’s health insurance exchange.

“The whole purpose is to force small businesses into the health care exchange in California,” said Ken DeVore, legislative director of the California NFIB. “Their rationale is the people who will self-insure are going to have healthier employees, and they want to have healthier employees in the exchange.”

Jones ratcheted down California’s proposed attachment point to $60,000, but said that he’s concerned about the entire small group market, not just the exchange. Jones said he’s already seen evidence that stop-loss insurers are marketing to firms with healthier profiles, raising concerns about adverse selection and the deterioration of the insurance market for businesses that don’t self-insure.

“I’m concerned about the impact on small employers — higher premiums and adverse selection if there is no regulation of stop-loss,” Jones said.

The stop-loss insurers, who say the adverse selection fears are unfounded, are closely watching the California legislation and hinted of a legal challenge if the stop-loss bill becomes law.

“If you look at the intent behind this California legislation, it’s not to regulate stop-loss carriers,” Ferguson said. “The intent is clearly to prevent the ability of certain employers to self-insurance. In our view, that’s contrary to the intent of ERISA.”

Jones, who said he’s taking a moderate approach by not pushing for a ban on stop-loss insurance, is hopeful the legislature will approve the bill. If anything, he says, an attachment point at $60,000 is too low, but he pointed out it’s consistent with the NAIC’s recent discussions.

“It’s important that we address this issue this year because the market reforms associated with the Affordable Care Act are going into effect now,” Jones said.