California Lawmakers Put Stop-Loss Insurance Legislation on Hold
However, California Insurance Commissioner Dave Jones (D) and other supporters of the measure said the bill might be renewed in a special session of the Legislature in December (Terhune, Los Angeles Times, 9/4).
Earlier this month, Gov. Jerry Brown (D) said that he plans to call a special legislative session at the end of the year focused on implementing the federal health reform law (California Healthline, 8/20).
Self-insurance plans -- which require employers to pay medical providers for workers' care -- typically are used by large employers with significant financial resources.
Recently, some insurers have begun selling a type of self-insurance plan called a stop-loss policy to smaller businesses with as few as 25 workers. Stop-loss plans limit employer payouts for big claims, guaranteeing that businesses are not responsible for medical expenses over a certain amount for each worker.
Regulators and health policy experts argue that stop-loss plans undermine the idea of self-insurance because employers do not bear a significant amount of the risk and because they allow companies to avoid certain state insurance regulations.
Critics said that insurers are selling the plans to companies with healthier workers, which could undermine the federal health reform law's goal to group healthy and sick individuals together to lower premiums (California Healthline, 4/23).
Insurers that sell stop-loss plans say they do not target businesses with younger workers or lower medical claims.
Details of Legislation
SB 1431 would impose new limits on stop-loss policies.
Originally, the bill would have banned stop-loss coverage below $95,000 per worker. However, lawmakers eventually reduced the limit to $45,000 per worker.
The state Senate passed the bill, but lawmakers put it on hold before it reached a final Assembly vote.
Discussing the decision to put the bill on hold, Jones said, "We think with a little more time we will be able to educate lawmakers about the threat posed" by a "loophole" in the federal health reform law. He said, "Our goal is to address this before 2014" when consumers and businesses start purchasing policies through the state health insurance exchange.Mike Ferguson -- chief operating officer for the Self-Insurance Institute of America, an industry trade group -- said groups that oppose the measure "put up enough resistance that legislators decided they needed to regroup." He said, "In this economic climate, the last thing you want to do is make it more difficult for companies to provide health benefits to workers" (Los Angeles Times, 9/4). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.