The House on Wednesday passed a bill that could protect and keep costs down for small and mid-sized self-insured employers.
The Self-Insurance Protection Act, which passed with a 400-16 vote, would prohibit state insurance regulators from overseeing these health plans by excluding medical stop-loss policies. All 260 Republicans who voted supported passage and only 16 Democrats opposed passage.
The legislation would amend the Employee Retirement Income Security Act, the Public Health Service Act and the Internal Revenue Code to clarify that federal regulators cannot redefine stop-loss insurance as traditional health insurance, ensuring that employers can continue to utilize the financial risk-management tool when offering employees healthcare coverage through a self-funded plan.
“It’s a preemptive play to prevent regulatory overreach in our view,” says Mike Ferguson, CEO of Self-Insurance Institute of America, a trade group for companies in the self-insurance marketplace. “We feel it’s important to go ahead and get this clarified now.”
The Obama administration, Ferguson says, saw stop-loss carriers as health insurers because they were bearing the risk. Thus, self-insured employers could be considered fully insured entities and be brought under the ACA umbrella, which would subject them to the medical loss ratio and the Cadillac tax, under an aggressive interpretation of the statute.
Without protections, stop-loss carriers would stop offering those policies, leaving employers in the lurch if they get hit with catastrophic claims.
“They don’t want to be conflated with health insurers,” says Ferguson.
Proponents are also hopeful that the legislation will help employers in their ongoing struggle to slow the growth of health benefit costs.
“By protecting access to self-insurance, we can help ensure employers have the tools they need to control healthcare costs for working families,” Rep. Phil Roe (R-Tenn.), who introduced the bill, said in a statement. “Millions of Americans rely on flexible self-insured plans and the benefits they provide. This legislation prevents bureaucratic overreach and represents an important step toward promoting choice in healthcare.”