on January 13, 2014 by admin in Insurance Industry, Comments (0)

Self-insurance industry fights back

Rep. Bill Cassidy, R-La. (Photo: AP)

A push to limit employers’ access to stop-loss insurance has picked up steam, amounting to one of the biggest battles facing the industry in years.

Stop-loss insurance is state-regulated, and in the last year the topic has come up in legislatures across the country. By the end of 2013, four states had passed laws restricting stop-loss in one way or another.

Self-insured employers pay for most worker health costs directly. Stop-loss allows these employers to protect themselves from bigger claims that could wipe them out. About 60 percent of insured American workers are in self-insured plans. Most of these workers are either in unions or employed by larger companies.

In April, Utah passed a law that included a provision saying that stop-loss insurers must cover incurred and unpaid claims if a small employer plan terminates. That’s “an unprecedented requirement,” according to Adam Russo, an attorney and the founder of the Phia Group, a Braintree, Mass., health insurance cost-containment consultancy.

In May, Colorado passed a law increasing the amount of money that a self-insured business must spend on health care for each employee before it can tap into stop-loss policies.

Rhode Island followed suit in June with a law restricting stop-loss insurance polices.

Finally, in October, California Gov. Jerry Brown signed a law that includes the requirement that stop-loss insurance purchased by a business cannot exclude any employee from coverage regardless of medical history. The law does grandfather in any such plan that was in effect up to Sept. 1, 2013.

Self-insured plans are exempt from several provisions of the Patient Protection and Affordable Care Act. Some health policy watchers have suggested that small employers with the lowest claims might try to cut their premiums by switching to self-insured plans. Regulators worry that could leave traditional insurers with the sickest, oldest employers and undermine a key goal of healthcare reform: to lower premiums by pooling together more healthy and sick workers.

The Self-Insurance Institute of America, the industry’s main lobbying organization, argues that states should not be enacting laws which regulate stop-loss policies as health insurance policies because “stop-loss insurance … does not provide coverage to individuals. Therefore, classifying it as health insurance is clearly a stretch.”

As the fight unfolds, members of the recently formed Self-Insurance Defense Coalition are campaigning to make sure stop-loss insurance doesn’t end up being redefined as health insurance.

Article source: http://www.benefitspro.com/2014/01/13/self-insurance-industry-fights-back

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