Senators Lamar Alexander (R-Tenn.), Jim Risch (R-Idaho), Marco Rubio (R-Fla.), and Senate Republican Leader Mitch McConnell (R-Ky.) today introduced a bill that would protect the right of employers to provide insurance to employees through self-insurance plans. Today, 100 million Americans receive health insurance through employers or labor unions that self-insure, meaning they pay employee health costs directly.
Many companies that self-insure as a means of providing insurance also purchase “stop-loss insurance,” which protects them against an outsized medical claim that would cause financial damage. In an effort to force these businesses to stop self-insuring and push more Americans into the Obamacare exchanges, the Obama administration has signaled interest in ending stop-loss insurance as it exists now.
Alexander, the senior Republican on the Senate health committee, said: “Any effort by the Obama administration to change the rules on companies that self-insure will break the president’s promise to millions more hardworking Americans. No matter if they like their employer’s health care plans, many won’t be able to keep them.”
“President Obama promised the American people time and time again that if they liked their current health insurance plan they could keep it,” said Risch. “That promise was false; the proposal greatly changes millions of middle class Americans’ plans. This legislation preserves small employers’ and individuals’ ability to make their own insurance choices, allowing them to keep their important stop loss coverage.”
“For millions of employees in small and mid-sized businesses, keeping the health insurance they’re happy with means keeping their self-insurance health plans. Unfortunately, the President could end up breaking his promise to these employees by ending these self-insurance plans and forcing these employees to find new ones,” said Rubio. “Small and mid-sized employers should have the freedom to continue offering their employees the self-insurance health plans they are happy with. That’s all this bill does.”
McConnell said: “Millions of Americans are living with the consequences of the President’s broken promises on Obamacare. In their zeal to defend their failing bureaucracy, the Obama administration must not break its promises to the millions of Americans who work at businesses that self-insure by preventing them from keeping the coverage they have and like.”
The Self-Insurance Protection Act (SIPA) ensures that employers are able to continue to provide quality health benefits to their employees through self-insured group health plans.
The bill is cosponsored by Senators John Boozman (R-Ark.), John Barrasso (R-Wyo.), Tom Coburn (R-Okla.), John Cornyn (R-Texas), Mike Crapo (R-Idaho), and Mike Enzi (R-Wyo.).
Employers offering health insurance to their employees are increasingly choosing to self-insure, meaning they directly pay their employees’ healthcare costs. This is true for all types of employers, including corporations, municipalities, and non-profit organizations. Sixty one percent of the commercial health insurance market is self-insured—a figure that has been growing steadily over three decades.
Self-insurance provides employers with the flexibility to customize their employee health benefits to best meet the specific needs of their workforce. Self-insurance also helps control costs because employers can more directly manage benefits such as wellness programs that save money and make people healthier.
Stop-loss insurance is a form of financial reinsurance that protects employers who pay health care costs directly from large claims that would cause financial hardship. The Obama administration has signaled interest in reclassifying this as health insurance, requiring it to meet all the requirements of health insurance policies under federal law, a move that could eliminate this as a tool for mitigating employers’ risk.