Tuesday, July 21, 2009

Self-Insured Plans And Their Buddy, ERISA, Vulnerable

The House’s Affordable Health Choices Act, H.R. 3200, as approved last week by the House Committee on Education and Labor and referred to the full House, includes provisions that would affect self-insured (or self-funded) health insurance plans. Many employers self-insure their health insurance plans to avoid multiple states’ insurance coverage mandates and allow them more plan design flexibility and thus lower costs.

Among the provisions for self-insured health insurance plans is one that would require health insurers and self-insured plans to pay a new annual federal tax per plan participant to fund comparative effectiveness research. The tax would be implemented in fiscal year 2013. The Department of Health and Human Services would determine the amount of the tax required to raise $375 million per year. If HHS were unable to determine the tax, it would be $2 per plan participant. H.R. 3200 also would authorize a study to determine the financial solvency and capital reserves of self-insured plans and the risk that these plans will be unable to pay claims. Furthermore, the study would ensure that the law does not establish incentives for small and medium-sized employers to self-insure their health care plans.

And self-insured health insurance plans also will have to meet any minimum benefit coverage requirements prescribed in the law.

Modify ERISA To Allow States Single-Payer?

Furthermore, an amendment to H.R. 3200 offered by Ohio Rep. Dennis Kucinich and approved on a margin of 27 to 19, would allow states to implement single-payer health care. Of course, in order for states to do this, the Kucinich amendment would provide for a waiver of Sec. 514 of the Employee Retirement Income Security Act (ERISA) to remove its preemption provisions for states that request it. ERISA Sec. 514(a) provides that ERISA will supersede any state law that "relates to" an employee benefit plan.

It is highly unlikely that the amendment will stick to revised versions of H.R. 3200. As noted in the Web site American Everyman, “After one state adapted a real “universal” health care program for ALL it’s citizens, it would only be a matter of time before it’s success would inspire EVERY state to adapt the same policy for themselves.” Or so some people believe. Kind of like a virus, you see.

But the insurance industry won’t allow that to happen as it could mean the demise, or at the very least, severe restriction, of their business. Self-insured employers also will lobby against the Kucinich amendment to avoid losing ERISA preemption and becoming subject to “insurance” requirements of multiple states.

The plot continually thickens….

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