It’s like the Hollywood movie Groundhog Day all over again. The Self Insurance Institute of America (SIIA) wakes up and has to face the same “anti-self-funding” arguments about adverse selection, insolvency and inferior benefits that it refuted last year … the year before … and the year before that.
Again in damage-control mode, this time the group is rebutting testimony by an NAIC (National Association of Insurance Commissioners) adviser aiming to restrict self-insuring health benefits by small employers, and eliminating stop-loss (S-L) insurance with attachment points below $40,000 for individual claims.
Timothy Jost, a law professor at Washington and Lee University, argued that self-insured employers are a problem for federal and state regulators and that stop-loss with low attachment points results in unreliable health plans, and will counteract pro-consumer health reform mandates.
A panel of experts affiliated with SIIA is responding to Jost, making these points:
Low attachment points do not mean the stop-loss carrier is insuring the self-funded plan. S-L insurers are not health insurance, SIIA says. They handle a low frequency of catastrophic claims and are not equipped to deal with a high volume of low dollar claims. They do not change the fact that self-funded plans must pay every claim before seeking S-L reimbursement. Also, “existing legal precedent is clear that stop-loss attachment point levels cannot be used as a factor to conclude that a self-insured employer is actually fully-insured.”
Employers that self-insure are in fact sufficiently regulated. While self-insured plans are exempt from state regulatory requirements, they are regulated under ERISA, HIPAA and COBRA, SIIA says. Further, they are subject to the vast majority of the new mandates under the health reform law (PPACA) — including dependent coverage until age 26, elimination of lifetime and annual caps and preventive services with no cost sharing.
SIIA also the rejected the professor’s statements that:
- employers purchase “self-insured packages” from insurers;
- self-insured plans cover primarily healthy groups; and
- self-insuring results in adverse selection in connection with the proposed state-operated health insurance exchanges.
“On behalf of the thousands of self-insured employers throughout the country who rely on the ability to access stop-loss insurance appropriate for the level of their risk tolerance to provide affordable health benefits for their employees, SIIA requests that the NAIC rejects any proposal that would further regulate stop-loss insurance. Such action is unnecessary, bad public policy and conflicts with existing legal precedent,” SIIA concluded.