Collins Subcommittee Examines The Benefits of Self-Insurance In An Uncertain Health Care Environment
ObamaCare Exempts Self-insured Plans From Some Requirements
House Small Business Subcommittee on Health and Technology, under the chairmanship of Rep. Chris Collins (R-NY), today held a hearing about health care self-insurance plans, and how their potential benefits may better suit small businesses than fully-insured plans.
Self-insuring is when an employer assumes all or a portion of the costs and risks associated with sponsoring their company’s health care benefits plan. Because the health care law exempts self-insured plans from several of its requirements, more companies are considering self-insurance for their workers’ benefit needs.
“Even before the healthcare law’s problematic rollout, small businesses were directly feeling the negative impact of ObamaCare. Higher insurance costs and onerous regulations are costing America small business jobs,” said Chairman Collins. “The burdens of the law are causing many companies to look for ways to remain viable. Because ObamaCare exempts self-insured plans from several of its requirements, some businesses are considering these plans as an alternative as it becomes more clear every day how misguided this law really is.”
Self-insured plans, which are more commonly used by large employers, are not subject to many of the health care law’s requirements that make health insurance more expensive. For example, the law’s medical loss ratio mandate, the “essential health benefits” requirement, standardized cost-sharing tiers, and the insurer fee apply to the fully insured plans traditionally used by small firms. The lower regulatory burden on self-insured plans may now make them more attractive to small employers under the new law.
A study by the International Franchise Association and the U.S. Chamber of Commerce, released yesterday, shows the health law is already resulting in higher costs of health coverage, forcing many businesses to reduce full-time jobs. The research shows that 31 percent of franchise and 12 percent of non-franchise businesses report they have already reduced worker hours because of the law and 27 percent of franchise and 12 percent of non-franchise businesses have replaced full-time workers with part-time employees because of the law.
Materials from the hearing are available on the Committee’s website HERE.
Michael W. Ferguson, President and Chief Executive Officer of Self-Insurance Institute of America in Simpsonville, SC, said, “...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. So in this current post-ACA environment, self-insurance does provide smaller organizations more certainty in their ability to be able to continue to provide quality health benefits along with will providing them better costs containment capabilities.”
Ms. Robin Frick, Combined Benefits Administrators, Inc., Madisonville, LA, testifying on behalf of the National Association of Health Underwriters, said, “…our membership reports almost universally that the looming PPACA-related market changes are causing significant anxiety within the employer community. Employers large and small are looking at all possible ways to gain greater control over their employee benefit options. We believe this need for control has sparked a greater interest in the possibility of self-funding among the small and mid-sized employer community.
“It’s also causing employers of all sizes to reduce the hours of certain types of workers and consider the possibility of dropping coverage altogether. As the implementation of PPACA moves ahead in the coming year, we hope that Congress and this committee will consider providing additional flexibility to employers of all sizes to help relieve their anxiety and ensure that they can continue to provide affordable and stable coverage options to employees.”
Thomas Faria, President, Sheffield Pharmaceuticals, New London, CT said, “While switching to self insurance provided a new set of challenges and has at times been a bit nerve racking in high utilization years, our decision to self insure has been a good one. Based on estimates of the yearly average increases that the traditional health care plans charged in Connecticut for plans of our size, we believe that self insuring saved the company over $400,000 over the span of four years.”