WASHINGTON, D.C. | March 8, 2017
It’s no secret that the cost of health care is a significant challenge for workers and employers. According to Gallup, health care costs topped the list of financial problems facing working families in 2016. Similarly, small businesses cited the same chief concern in a recent National Federation of Independent Business survey.
Perhaps the one bright spot in today’s uncertain health insurance market is that employers are using innovative strategies to provide affordable health care coverage for workers and their families.
One of the ways employers have eased the burden of rising health care costs is through self-insured policies. This is a very popular approach among employers of all sizes. In fact, in 2016, more than 60 percent of employers offering health care coverage were self-insured.
These plans benefit workers and employers in a variety of ways. With a self-insured policy, employers have the flexibility to design a health care plan tailored to the unique needs of workers and their families. For example, a company with a younger workforce may add additional wellness programs related to prenatal care. At the same time, employees are free from restrictive requirements that force them to purchase specific coverage that they may not want or need.
Workers and employers also have greater control over their health care dollars. Instead of purchasing a plan from an insurance company, self-insured employers pay their employee health care costs directly. This allows them to retain savings in years with lower claims and pass those savings on to their workers.
For these reasons, this cost-effective model is popular among both employers and labor unions. It’s also used by some cities, counties, and school districts. In 2014, the Executive Director of Columbia Power and Water Systems, a municipal utility in my home state of Tennessee, testified before the committee on the effectiveness of their self-insured policy.
Because of the flexibility of their self-insured policy, this local utility provider was able to keep their workers’ deductibles at $200 for an individual and $400 for a family in 2014 – far below what families are paying on collapsing Obamacare exchanges. And eligible retirees and their dependents receive the same benefits as current employees.
The witness testified that their self-insured policy allows them to “retain the best possible workforce, increase productivity, and maintain a high-level of satisfaction with the plan.”
There’s no doubt that these are high-quality plans that serve as a viable option for workers and employers alike. However, because employers take on greater financial risk with these plans, most also purchase what’s known as “stop-loss” insurance.
Stop-loss insurance has never been considered health insurance under federal law. The reason is simple. It’s not health insurance. It does not pay medical claims or perform any of the traditional functions of health insurance. What it does is provide a financial backstop to actual health insurance and protect the benefits of workers and their families.
Always looking to expand the regulatory state, the previous administration threatened to regulate stop-loss as traditional insurance. Doing so would put workers and employers at risk of losing their self-insured policies.
As we know, the last thing workers and employers need right now is to lose access to the health care plan they like because of misguided federal policies. Although we have a new administration that understands we need more affordable health care options, not fewer, Congress must act to prevent a future administration from restricting self-insured plans.
Why? Employers plan years in advance, and they need long-term certainty and stability when it comes to offering affordable health care to their employees. At the same time, working families deserve the peace of mind that they will have continuity of care and won’t be kicked off their plan just like millions of Americans were under Obamacare.
The Self-Insurance Protection Act will provide that peace of mind, certainty, and stability by clarifying once and for all that stop-loss insurance is not health insurance and preventing future bureaucratic overreach. This positive reform will promote more choices and ensure working families can continue to benefit from this popular health care model, not just today, but for years to come.