A health care reform measure passed by three committees of the U.S. House of Representatives would “destroy” the self-insurance system in the country, according to the Self-Insurance Institute of America.

The group, representing the self-insurance and alternative risk transfer industry, said under the plan the projected migration by an estimated 48% of covered individuals means potentially smaller employer risk pools and widespread uncertainty that would “undermine the continued viability of existing self-insured plans.”

The American Affordable Health Choices Act (House Resolution 3200) has been approved by the House Ways and Means, Energy and Commerce, and Education and Labor committees, and is likely to be addressed by the full Congress in the coming weeks.

Mike Ferguson

The SIIA said in a statement that the proposal goes against the Employee Retirement Income Security Act of 1974 (ERISA), a federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans.

“This act would completely undermine the federal ERISA law that enabled employers to provide uniform employee benefit plans throughout the country, as well as to shape plans to fit the needs of their employees,” said Mike Ferguson, chief operating officer of SIIA. “The employer-based system is important to preserve because right now it covers more Americans than any other health coverage method.”

Ferguson said “A majority of all employers provide ERISA-based health plans” to more than 160 million employees and their dependents.

Besides costing more and providing less, the bill would “eliminate the incentives that ERISA provides to employers in federal preemption and benefit plan design,” Ferguson said.

“That would create a vacuum in health coverage,” Ferguson said. “The giant sucking sound you will hear will be the flow of individuals migrating to rigid ‘one-size-fits-all’ private or public health plans that will be less beneficial and less efficient.”

The group identified what it calls 10 negative impacts of the bill, including that it supersedes the ERISA framework and the structure of the employer-based healthcare system; grants state waivers from ERISA preemption; requires higher risk exposure; increases cost-shifting to employer plans; imposes taxes on employer-sponsored plans; mandates benefits for self-insured plans; eliminates the self-insurance option for certain employers; removes plans’ control over provider networks; and could disallow the subrogation of benefits.