Sens. Olympia Snowe, Michael Enzi and Tom Coburn are objecting to the possibility that the Obama administration might try to change the rules governing self-insured employer health plans that use stop-loss arrangements.
The Republican senators are defending self-insured employers’ use of stop-loss coverage in a comment letter submitted in response to an administration request for information (RFI) on the stop-loss market.
“Please explain the statutory authority you are asserting in pursuing a potential change in federal rules relating to stop loss insurance for self-insured plans,” the senators say. “Given all of the regulatory uncertainty created by the new health care law that is plaguing employers and health plans, why did the Administration deem it necessary to pursue this RFI pertaining to a subject over which Congress did not grant the executive agencies legislative or regulatory authority?”
But some state regulators wrote to point out that their states already impose rules on the stop-loss market that govern, for example, how small a stop-loss arrangement can be.
“In Maryland, the minimum attachment points for stop loss insurance ($10,000 for specific, 115% of expected claims for aggregate) are established by statute,” says Maryland Insurance Commissioner Therese Goldsmith.
The U.S. Treasury Department, the U.S. Labor Department and the U.S. Department of Health and Human Services issued the stop-loss RFI in May.
The stop-loss RFI attracted 79 responses, including responses from insurers, insurance agents, regulators and trade groups.
PPACA AND THE STOP-LOSS MARKET
The Patient Protection and Affordable Care Act of 2010 (PPACA) is supposed to create a new system of health insurance exchange — Web-based health insurance supermarkets — starting in 2014.
If PPACA takes effect on schedule and works as expected, individuals and small groups will be able to use new tax subsidies to buy health coverage through the exchanges.
Some employers, including many large employers, operate their own self-funded health plans rather than relying on conventional health insurers. Some of those self-insured employers use stop-loss arrangements — insurance for health plans — to limit their exposure to catastrophic claims, such as huge claims for organ transplants or a large number of big claims resulting from a flu epidemic.
A stop-loss program may cover a health plan for claims over a specified “attachment point.”
For a plan with stop-loss protection, the attachment point is to the plan roughly what a health insurance policy deductible would be to the holder of an individual health insurance policy.
PPACA exempts self-insured employers from many PPACA requirements.