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Self-insurance group asks Congress for stop-loss help

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The Self-Insurance Institute of America hopes a new presidential administration will help it get the third version of a stop-loss defense measure signed into law.

The Simpsonville, South Carolina-based group is seeking congressional support for the Self-Insurance Protection Act bill, a measure that would exclude stop-loss insurance from the federal definition of health insurance.

The SIPA bill could help employers with small self-insured plans get stop-loss insurance from entities other than major medical insurance providers, by blocking state efforts to apply major medical insurance rules to small stop-loss arrangements.

Related: Self-insured plans seek ACA protection

Jay Ritchie, an executive from a stop-loss insurance issuer, testified on behalf of the SIPA bill Wednesday, at a hearing in Washington organized by the House Education and Workforce Committee.

Since the Affordable Care Act came along, “self-insurance has been a viable for some small businesses,” Ritchie said at the hearing, which was streamed live on the web. “Passage of SIPA is needed to maintain that option.”

Witnesses at the hearing also testified on behalf of H.R. 1101, a bill that would encourage small businesses to join together to form multi-state association health plans, and a draft of the Preserving Employee Wellness Programs Act, a bill backed by the American Benefits Council.

Rep. Marcia Fudge, D-Ohio, said at the hearing that Republicans were trying to distract voters from the fact that Republicans have tried to repeal the Affordable Care Act more than 60 times and still have no replacement proposal.

The hearing “is nothing more than just stalling till they can come up with a plan,” Fudge said. “They have no clue what to do.”

A recording of the hearing is available on the committee website.

The House Education and the Workforce Committee held a hearing on three health coverage rule change proposals Wednesday. (Video: EdWorkforce/YouTube)

SIPA bill details

Rep. David Roe, R-Tenn., is preparing to re-introduce the Self-Insurance Protection Act bill in the 115th Congress.

He sponsored an earlier version of the bill, H.R. 1423, in the 114th Congress. That version attracted just two cosponsors.

Bill Cassidy, a Louisiana Republican who used to be in the House and is now in the Senate, sponsored the first House SIPA bill, H.R. 3462, in the 113th Congress. Cassidy attracted eight cosponsors.

Employers with self-insured plans can use Employee Retirement Income Security Act rules and interpretations that exempt self-insured plans from state health benefits mandates. Sponsors of self-insured plans can also use Affordable Care Act provisions that exempt self-insured plan sponsors from some of the ACA mandates that apply to fully insured group health plans.

Stop-loss insurance is an insurance product that protects insurance plans against catastrophic losses.

Many sponsors of self-insured health plans use stop-loss insurance, or insurance for insurance plans, to shield themselves against the possibility that some enrollees might need organ transplants, or a life-or-death medication that costs $100,000 per year.

Supporters of self-insured plans say that the plans help sponsors tailor coverage to meet employees’ health benefits needs, encourage employees to take care of themselves, and hold down costs.

Critics argue that access to self-insurance hurts the market for fully insured group health coverage, by pushing the employers with the youngest, healthiest workers to cut costs by self-insuring. When the employers with healthier workers self-insure, that pushes up costs still further in the fully insured market, by leaving the fully insured market with employers with older, sicker workers, the critics say.

Self-insurance critics also argue that some small employers might by using stop-loss insurance as if it were just high-deductible, fully insured health coverage, without understanding that employers using stop-loss insurance lack many of the legal protections they would have if they were using fully insured small-group health coverage.


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