Brokers blast CT bill imposing mandates on self-funded employer health plans

HBJ PHOTO | DAVID KRECHEVSKY The State Capitol in Hartford.

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A bill in the state General Assembly that imposes several mandates on self-funded, employer-sponsored health plans has drawn strong opposition from brokers and businesses, who say it will spike healthcare costs and increase employer liabilities.

Senate Bill 10, An Act Concerning Health Insurance and Patient Protection, is a 30-page bill with 19 sections that address several insurance-related issues.

Section 10 of the bill imposes a series of mandates on self-funded, employer-sponsored health plans and significantly increases the amount of medical risk liability for employers.

The bill is on the agenda to be discussed by the legislature’s Insurance and Real Estate Committee during a public hearing on Thursday.

In an email to its members sent Tuesday, the Connecticut Business & Industry Association, the state’s largest business organization, said the bill is bad for businesses in the state for a couple of reasons.

According to the email, which was signed by CBIA lobbyist Grace Brangwynne, the bill “allows the state to impose mandates on self-funded employer health plans, which may violate the Employee Retirement Income Security Act of 1974.”

The bill also “increases the monetary amount of claims the employer is responsible for to at least $50,000, 120% of expected claims, or $10,000 x the number of enrolled employees,” Brangwynne states. “This will directly increase employer and employee healthcare costs.”

Brangwynne also notes that self-funded medical plans “could face cost increases of at least 20% — and even more per employer group.”

According to CBIA, half of Connecticut’s businesses use self-funded plans, making the mandates in the bill “an unmanageable cost burden on employers and employees. Small businesses may withdraw benefits completely because it is too costly, or move to the more expensive fully-insured market.”

More than a dozen insurance brokers and other businesses filed testimony opposing the legislation in advance of Thursday’s public hearing.

Kathleen Aiken, a broker with Farmington-based MW Group Benefits Inc., states in her testimony that the changes proposed in the bill “would make it nearly impossible for insurance carriers to offer level-funded health plans, which many small businesses rely on to provide affordable health benefits to their employees.”

She adds, “If this bill passes, small businesses will have fewer choices — either switch to much more expensive fully insured plans, drop group coverage entirely, or push employees to the individual marketplace. This would create serious financial strain on both businesses and their employees.”

Joseph Bucci, an accountant and principal with Blueprint Benefit Advisors LLC in New Haven, also submitted testimony opposed to the legislation.

Bucci said his role as a broker is to help small businesses find “creative, affordable solutions to provide benefits. Lately, one of the only promising solutions in the market has been level-funded plans paired with stop-loss insurance.”

S.B. 10, he said, “threatens to dismantle this option, leaving me and my clients with diminished choice and flexibility.”

Stop loss insurance protects self-insured employers from catastrophic claims that exceed predetermined levels. If the total claims submitted exceed the limit, the stop-loss insurer either covers the claim or reimburses the employer.

Bucci states that he currently works with insurers to tailor policies that suit each of his client’s needs, but that “S.B. 10’s one-size-fits-all approach” eliminates the ability to customize.

“It’s essentially telling my clients that the state knows the acceptable level of risk for their business better than they do,” Bucci states. “This is not true – a solution that might be appropriate for one company could be untenable for another. We need to preserve the ability to adjust coverage to each employer’s situation, which SB 10 would severely limit.”

The Insurance and Real Estate Committee’s public hearing is scheduled to be held Thursday at 10 a.m. in Room 2C of the Legislative Office Building in Hartford.