Stop-loss and malpractice bills near the House floor

The bill would affect claims involving nursing home negligence, defective medical devices and defective pharmaceuticals as well as medical malpractice, the opponents say.

Mike Ferguson of SIAA testified in favor of H.R. 1304 earlier this month. (Photo: House Education)

H.R. 1304

H.R. 1304, the self-insurance plan bill, would limit states’ regulatory role by excluding stop-loss insurance from the federal definition of health insurance coverage for purposes of the federal Public Health Services Act, the Employee Retirement Income Security Act of 1974, and the Internal Revenue Code.

Members of the House Judiciary Committee approved the bill Monday by a voice vote.

Rep. David Poe, R-Tenn., is the lead sponsor.

Employers can use ERISA exemptions to self-insure, or operate self-funded health plans outside the reach of state group insurance benefits regulations.

Many employers with self-insured plans use stop-loss insurance, or insurance for insurance plans, to protect themselves against catastrophic losses, such as bills for organ transplants, or a large number of bills for enrollees who need to spend time in the hospital due to a flu epidemic.

Some regulators and others say small employers are using stop-loss plans with very low attachment points, or stop-loss deductibles, as if the stop-loss plans were high-deductible health plans, without necessarily understanding that stop-loss plans follow different rules than the rules that apply to small-group plans.

Some health insurers have argued that letting small employers choose to self-insure may hurt the risk profile of the fully insured small-group market, by encouraging the small employers with the youngest, healthiest employees to self-insure, and leaving insurers with the small employers with the oldest, sickest, most wellness-program-resistant employees.

Supporters of H.R. 1304 say the bill will put small employers and large employers on a level playing field.

“Only self-insured plans are exempt from a patchwork of benefit mandates and regulations imposed under state insurance laws,” supporters say in the notes accompanying the Rules Committee version

Opponents say the bill would weaken Affordable Care Act protections and other protections for the workers enrolled in small-group health plans. A stop-loss provider can “laser,” or set higher attachment points for some employees based on health status, and employers may find ways to get around ACA rules and pass those extra costs on to the employees, the opponents say.

The opponents cite North Carolina as an example of a state that’s tried to prevent what it sees as stop-loss abuse by regulating small stop-loss insurance plans as if they were ordinary health insurance plans.

Related:

House votes on FSA funds and medical malpractice

Battle over patients’ rights bills heats up

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