Advisers argue against more oversight for self-insured plans

The benefits industry is pushing back against a campaign by some policy-makers to increase federal oversight of self-insured health plans, particularly in regards to the purchasing of stop-loss insurance.

Testifying before Congress Wednesday, Michael Ferguson, president and CEO of the Self-Insurance Institute of America, scoffed at claims employers may use self-funded plans backed by stop-loss insurance to “dodge” fees and requirements applicable to fully-insured health plans under the Affordable Care Act.

He further cast doubt upon an argument that increased small-employer investment in self-funded plans could contribute to adverse selection and compromise the ACA’s exchanges.

“These contentions are inaccurate based on the review of those ACA requirements applicable to self-insured plans, along with the recent findings of the RAND Corporation on this subject,” Ferguson told the House Committee on Education and Workforce’s subcommittee on Health, Employment, Labor and Pensions.

Maura D. Calsyn, director of health policy at the Center for American Progress, told the same committee, “Ultimately, self-funding will likely lower costs for some employers who choose this path. But this trend will dramatically increase costs for other employers and their employees who remain in the insured market because self-funding is not a viable alternative.”

She encouraged lawmakers to increase regulation of the plans, saying, “Oversight and regulation of stop-loss insurance, which is extremely limited today, will help stabilize the small-group market and protect both employers and employees.”

Robin Frick, an adviser at Combined Benefit Administrators Inc., disagrees, saying there is adequate oversight on both the federal and state levels.

In November, she testified to the House Small Business Subcommittee on Health and Technology that self-funded employer groups may not be subject to state-level insurance regulation, but are subject to the Department of Labor’s federal regulatory authority as per ERISA, and the stop-loss policies that almost always accompany a self-funding arrangement for small employers are regulated by state departments of insurance.  

“State insurance regulators, who are the experts in both their field and in the unique market variances of their states, have a variety of means at their disposal  to regulate stop-loss policies sold in their states as they feel is warranted,” she testified.

Rep. Dave Loebsack (D-Iowa) said Wednesday of the workers that get medical coverage through their jobs, about three in five work for an employer who self-funds. Recent reports have indicated more employers may be looking to self-insure, he added.