Self-insured health plans were the topic of testimony at a recent hearing organized by the House Small Business Subcommittee on Health and Technology on Capitol Hill.
Among the witnesses were Robin Frick, a benefit plan administrator from Madisonville, La., who spoke on behalf of the National Association of Health Underwriters, and Michael Ferguson, who serves as the CEO of the national trade association Self-Insurance Institute of America.
Frick pointed out that most market protection rules of the Patient Protection and Affordable Care Act will apply to self-insured groups as well as to insured groups. And some protections, “like non-discrimination testing, already apply to all self-funded plans.”
On the other hand, Linda Blumberg of the Urban Institute, a health policy watcher, was among those who testified that young, healthy small groups could use self-insurance to get around ACA requirements, and that a shift toward self-insurance could destabilize the small-group health insurance market.
But according to NAHU’s Frick, the U.S. Department of Health and Human Services is giving more flexibility to insured plans in some areas, such as employee participation requirements, than to self-insured plans.
Ferguson listed some of the ACA rules that apply to non-grandfathered self-insured plans: a ban on annual and lifetime benefits limits; limits on waiting periods; preventive services coverage requirements; benefits summary requirements; disclosure requirements; external claim denial review requirements; and an emergency services coverage mandate.
Ferguson testified that many of the ACA provisions that exempt self-insured groups, such as health insurance rate rules, are actually irrelevant to self-insured groups because self-insured plan sponsors already have an obvious incentive to try to hold down administrative costs.
“We believe it is fair to say that the law has created added uncertainty in the health care marketplace and contributes to more acute cost fluctuations, at least in the short run,” said Ferguson, of the SIIA.
Self-insurance is an alternative to traditional group health insurance, one in which organizations custom design their own health plans, consistent with federal law, and pay claims as they are incurred instead of paying fixed premiums to an insurance carrier.i