Health Insurance Definition Bill Nears House Vote

H.R. 1304 could help small stop-loss plans

Rep. David Roe, R-Tenn. (Photo: House Rules) Rep. David Roe, R-Tenn. (Photo: House Rules)

A federal bill that could limit the ability of state insurance regulators to oversee small self-insured employer health plans is heading toward a vote on the House floor.

House members voted 234-184, almost entirely along party lines, on Tuesday to proceed with consideration of H.R. 1304, the Self-Insurance Protection Act bill.

All of the Republicans who participated voted for consideration of the bill. Two Democrats crossed party lines to vote for consideration, and the other 182 voted against consideration.

(Related on ThinkAdvisor: Self-insurance group asks Congress for stop-loss help)

The bill would exclude medical stop-loss for a self-insured health plan from the definitions of "health insurance coverage" given in one section of the Employee Retirement Income Security Act of 1974, in one section the Public Health Service Act, and in one section of the Internal Revenue Code.

Rep. David Roe, R-Tenn., the sponsor of H.R. 1304, talked about the bill Monday, at a hearing on the final form of the bill conducted by the House Rules Committee.

Roe told House Rules members that he himself has offered a self-insured health plan. He accused the Obama administration of trying to "sniff around self-insurance" and cause problems for users of a useful major medical insurance alternative.

"Just leave it alone," Roe said at the hearing, which took place in Washington and was streamed live on the web. "It's working."

Rep. Robert Scott, D-Va., said H.R. 1304 would shift costs from employers with healthier employees to employers with sicker employees, without cutting overall employer health benefits spending.

The healthier employers would self-insure, and that would increase premiums for the employers still in the fully insured market, Scott said.

"That's the problem with these schemes where you try to violate arithmetic," Scott said.

The House Rules Committee posted a video of the hearing and hearing documents on the web.

Self-Insurance: A Primer

ERISA preempts state efforts to regulate employee benefits, but it lets states regulate health insurance.

Regulators have held that ERISA lets self-insured employer health plans operate under the oversight of the federal Employee Benefits Security Administration, rather than state insurance regulators. Setting up a self-insured health plan frees an employer from having to comply with many state group health insurance rules.

Many sponsors of self-insured health plans use stop-loss insurance, or insurance for health plans, to protect themselves against catastrophic losses.

In the past, typical self-insured plan sponsors, and typical health plan stop-loss users, were large employers.

In recent years, some brokers, insurers, regulators and others have talked about the possibility that more small employers might be self-insuring, in an effort to escape from state small-group insurance requirements, and from some Affordable Care Act requirements that affect only fully insured groups.

Consumer groups and regulators have said that some employers with fewer than 50 employers might be using stop-loss arrangements with very small "attachment points," or stop-loss deductibles, as if they were high-deductible major medical plans, without necessarily understanding that a stop-loss policy is more loosely regulated than a small-group health insurance plan. 

--- Read Large-group broker sees more interest in health stop-loss on ThinkAdvisor.

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