Comments Introducing the Small Business Health and Technology Subcommittee Hearing on Self Insurance from November 14, 2013
Congressman Chris Collins, New York
November 14, 2013
“The subject of today’s hearing is certainly not a magic elixir that can solve all of these problems for every small business, but it could be a viable option. Amid all of this confusion, small firms need as many options as they can find to keep their businesses moving forward and make money so they can invest in the growth of their companies.
In a self-insured situation, an employer can choose to assume all or a portion of the cost and the risks associated with sponsoring a healthcare plan. Under this arrangement, the employer forecasts how much it is likely to spend on health benefits–it is usually an actuarial calculation–and then decides whether or not it makes practical or economic sense for that employer to pay these costs out of pocket or to purchase a fully-insured product. Traditionally, small businesses have not utilized the option to self-insure. According to the Kaiser Foundation, only about 16 percent of employees at small firms are currently covered by a self-insured policy, as opposed to nearly 83 percent of employees at large firms. But with the onslaught of regulations, cost increases, and uncertainty surrounding fully-insured plans as a result of the president’s healthcare law, more small businesses may choose to explore self-insurance as a manner of providing competitive benefit packages for their employees. Some small business owners may find that a self-insured policy would be cheaper as it may offer them greater flexibility in designing the health coverage they want to provide for their employees.”
Congressman Chris Collins, New York
November 14, 2013
“This testimony is very timely, and the issues are real. Certainly, Dr. Blumberg does point out that as small employers look to control their own costs, to control their own profits and their future, in doing so there could be a negative impact on the community-rated pools. But I would point out that happens today because the large employers are all self-insured. So when you really look at what is happening today, that segmentation of risk has happened in a huge way because any and all employers with over 500 employees are all self-insured. And so it is just a true statement as people peel out and they manage their own risk as Mr. Faria is managing his and understanding how to incentivize good behavior, going to Urgent Care instead of emergency rooms. As that happens, the pool of folks left in the community-rated pools may get more and more toxic from a standpoint of risk and hence, cost. But there is nothing perfect in life and I think small business exists to produce a product, to make money, to grow their business, create jobs, and anything we can do to help small business create jobs by controlling their costs is, in fact, the biggest benefit that we have and the biggest problem we have in this country today is a lack of jobs. So for that reason I know I am going to and the Committee will certainly be suggesting to someone–and I will pick the number, over 25 employees–to go out and take a look at self-insurance. It is not going to be perfect for everyone. Buyer beware as was also pointed out. Make sure you have got a good TPA. Make sure that TPA has got a good pharmacy benefit manager. Make sure that you understand your risk on the stop-loss piece, both individually and in the aggregate. And it is going to take time but I certainly, as it is mid-November, would encourage any and all companies. And as I understand it, many could do so and decide to kick it off on April 1st. When they sign up for community plan, generally they are not locked in. So again, I want to thank you all for coming. I think this was very timely and I, to the best of my knowledge, pretty much covered, crossed most of the Ts and dotted the Is.”
