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Hearing Reviews Benefits of Self-Insured Plans

Members raise concerns with possible regulation to discourage participation in self-insured market

The Subcommittee on Health, Employment, Labor, and Pensions, chaired by Rep. Phil Roe (R-TN), today held a hearing entitled, “Providing Access to Affordable, Flexible Health Plans through Self-Insurance.” During the hearing, members discussed the positive benefits enjoyed by workers and employers participating in self-insured health plans and expressed objections to regulatory efforts that would discourage the use of this important health insurance option.&

In his opening remarks, Rep. Roe said, “Employers who manage a self-insured health plan bear the financial risk of providing health benefits to workers. Employers will often work with a third-party to process claims and benefit payments. Many self-insured employers also purchase a product known as stop-loss insurance, a risk management tool that protects employers against catastrophic claims and high costs.”

“It is worth noting just how vitally important this health insurance option has become,” continued Rep. Roe. “Support for self-insurance has grown because it can be tailored to the needs of the workforce and offers transparency to ensure the plan is managed in an efficient and effective way. Just as important, self-insurance helps control health care costs, which can lead to higher wages for workers and more resources for employers to invest in job creation.”

Robert Melillo, an executive at USI Insurance Services, echoed the benefits of self-insurance. “A self-funded program allows a plan sponsor to customize, measure, evaluate, and manage each and every aspect of their benefit plan,” said Mr. Melillo. “I believe a plan sponsor’s choice to self-insure with the use of quality and customizable stop-loss insurance programs is essential if they have any chance of managing their future health care spending.”

Subcommittee members listened to the story of one employer who has been able to offer employees comprehensive, affordable health coverage through a self-insured policy. Wes Kelley is the executive director of Columbia Power & Water Systems, a municipal utility for the City of Columbia and Maury Country in Tennessee.

Speaking from personal experience, Mr. Kelley testified, “Over the past 22 years, our self-funded arrangement has allowed the utility to maintain above average benefits for our employees, dependents, and eligible retirees… These benefits are provided without the employees contributing to the cost of health insurance through their paycheck or otherwise. Furthermore, eligible early retirees and their dependents enjoy the same benefits as active employees.”

Maintaining access to a vibrant self-insured marketplace is a priority for policymakers. Michael Ferguson, president and CEO of the Self-Insurance Institute of America, warned, “The administration may make this option more difficult by restricting the availability of stop-loss insurance. Specifically, it is believed that the federal agencies may ‘interpret’ the definition of health insurance coverage to include stop-loss insurance.” These concerns were confirmed earlier by a 2013 New York Times article citing administration officials interested in discouraging the use of stop-loss insurance.

Chairman Roe urged the administration to abandon such a misguided effort, stating, “The administration must clarify its plans to potentially regulate in this area, and explain the legal basis it has to do so… The employers, workers, unions, and families who rely on these health plans deserve the truth now. Like every American, they were told if they liked their current health care plan they could keep it; they have a right to know whether they too will be on the losing end of the president’s broken promise.”

To learn more about today’s hearing, or to watch an archived webcast, visit  


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