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Sam Fleet: Self Funding Is Doing Fine

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State and federal regulators have been talking for months about putting the brakes on the market for small self-insured health plans and the stop-loss insurers that protect those plans against catastrophic losses.

So far, though, the small-group self-insured plan market and the overall health stop-loss market seem to be doing well, according to Sam Fleet, president of the AmWINS Group Benefits Division, Warwick, R.I.

Sam Fleet

Fleet, who has become a highly visible promoter of the stop-loss industry, talked about the state of the industry today during a brief telephone interview.

“We’re quoting double the amount of small-group stop-loss this year than we were a year ago,” Fleet said. 

Stop-loss rates seem to be increasing, and carriers have been less aggressive about competing for cases, Fleet said.

Regulators may be talking about changing the rules governing the stop-loss market, but the rules could take a while to change, if they do change, Fleet said. 

An employer can “self insure” a health plan by simply setting aside cash to pay claims rather than relying on an outside company to pay the claims. The sponsors of the self-insured plans often use stop-loss arrangements to protect themselves against the risk that one patient will end up with huge bills or the plan as a whole will run up much higher-than-expected bills.

Many states set minimum stop-loss deductibles for small groups, to discourage employers from thinking of a small, low-deductible stop-loss plan as a form of ultra-flexible, lightly regulated major medical insurance. 

California lawmakers have been working on a bill that could increase the minimum small-group stop-loss deductibles in that state, and the National Association of Insurance Commissioners (NAIC), Kansas City, Mo., has been looking into the idea of increasing the stop-loss deductible minimums it recommends.

The U.S. Department of Health and Human Services (HHS) also has expressed concerns about the possible effects of growth in the small group stop-loss market on the market for traditional fully insured health plans.

The California stop-loss bill did get approval at the committee level, but the NAIC has postponed consideration of changes to recommended deductible minimums, Fleet said.

At the NAIC, “it takes so long to get a model through,” Fleet said, adding that the NAIC process tends to be slow because regulators go to great lengths to get and consider comments.

The fall general elections also could affect the stop-loss regulatory climate, Fleet said.

If Mitt Romney wins, he might end up with enough support from moderate Democrats in the Senate to replace the current Patient Protection and Affordable Care Act (PPACA) with some kind of “PPACA light” package that would be more market friendly and might lead to a more positive view of small self-insured plans and small stop-loss insurance arrangements at HHS, Fleet said.

Knowing how regulators at HHS will proceed if Obama wins is difficult, Fleet said.

“I know they’re working as hard as they can,” Fleet said. “But I think they’re overwhelmed.”


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