Self Insurance and Health Reform

Under ERISA, more than 160 million people receive job-related health benefits, including over 75 million people covered by self-insurance. By any measure, this is strong evidence that ERISA and self-insurance are success stories in the U.S. health care system.

Nevertheless, self-insurance and the employer based system could be a casualty of health reform legislation. Proponents of a more government-centric health care system view ERISA as a barrier to achieving drastic overhaul of the current system.

I agree with the pundit who aptly noted that  blaming ERISA and self-insurance for problems in the U.S. health care system is like blaming the air bag in the car because the car went off the road into a ditch.

Let’s hope Congress and the Administration don’t destabilize a private health system including self-insurance that has been beneficial to the health of millions of Americans.

SELF INSURANCE HEALTH FACTS

The Skinny on Self Insurance

Nothing has revolutionized the U.S. health care system over the past quarter century quite like self-insured group health benefits.

Self funding allows employer sponsored health plans–now covering 75 million Americans–to assume the financial risk for providing health benefits for employees, rather than covering that risk thru insurance carriers.

From objective, public, non partisan sources,  I have gathered the following data about self insured health plans:

• Some 55 percent of the 132.8 million individuals in health plans governed by ERISA were in self-insured plans in 2007. (Employee Benefit Research Institute, 2008)
• From January 2008 to July 2008, self insured health plan enrollment grew 1.6 million lives, or 2.2%, to more than 75.5 million members nationwide (Health Leaders InterStudy, 12/22/08)
• Of the roughly 160 million people whose primary coverage will come from an employment based plan in 2009, about 88 million will have coverage from an employer that bears the financial risk of providing it, and 72 million wull have coverage from an insurer. (Congressional Budget Office, 2008)
• A higher percentage ofworkers in PPOs are in  self insured health plans (64%), compared to 47% in conventional insured plans and 40%  in HMOs .  (Kaiser Family Foundation, Employer Health Benefits 2008 Annual Survey )    

 

 

Stop Loss Insurance Is Not Health Insurance

NY Gets It Right

July 20, 2009

The New York Office of General Counsel (OGC) has correctly ruled that stop-loss insurers are not subject to the state’s prompt payment law. (OGC Opinion No. 09-04-08). The distinction is that stop-loss insures only the employer plan sponsor and does not provide health coverage to covered employees. There are no “covered  lives” associated with a stop loss policy because stop loss  indemnifies  employers (plan sponsors) and does not pay health benefit claims to individuals or providers.  In other words, stop loss insurance reimburses employers for excess losses over a predetermined amount. The OGC got it right by reversing  and clarifying an earlier opinion that concluded stop loss insurance  constitutes health and accident insurance.(07/19/09).