A bill under consideration by Texas lawmakers to change the way the state collects revenues on stop-loss insurance carriers would raise the cost of plans for self-insured employers, according to lobbyists for the self-insurance industry.
George Pantos, general counsel for the Self-Insurance Institute of America, the trade lobby representing self-insured employers, said Texas lawmakers were looking to impose a higher tax burden on stop-loss carriers to pay for a state insurance fund which is posting an estimated deficit of $30 million to $40 million. "We looked at this (draft bill) and concluded it was a horror," he said.
The assessments could raise the cost of stop-loss premiums anywhere from 25 percent to 40 percent. That would increase the total cost of insurance in a plan by 4 percent to 5 percent, on top of the double-digit rate increases affecting many plans.
Last year assessments were proposed in Colorado, Indiana and Wisconsin. While assessments were defeated outright in Colorado, at least for now, the Indiana assessment is still in place, albeit in compromise form. Wisconsin never passed the legislation.
In the Indiana case, Avemco Insurance Co., Hartford Life and Accident Insurance Co., HCC Life Insurance Co., The Ohio National Life Insurance Co., and the Pacific Life Insurance Co. were plaintiffs in the suit. Several carriers left the state after the assessments were announced, only to re-enter later, said James Kinder, CEO of the SIIA. Pacific Life ended up exiting the business altogether. In November it sold its health insurance line, including its stop-loss business, to Pacificare Health Systems.
Stop-loss assessments are already in effect in California, Kentucky, Michigan, Mississippi, Ohio, Oregon and Washington. "We're predicting this will shape up to be a major discussion in the industry," said James Kinder, CEO of the SIIA.
The bill under consideration in Texas would alter the assessment funding structure to a per-capita formula. The formula in use is based on the premium paid by traditional insurers doing business in that state.
SIIA lobbyists say the assessments unfairly shift the cost of paying for the uninsured onto the self-insured, and that stop-loss insurance carriers bear an unfair funding burden. That burden should be borne by a state's general revenue fund. "These policies benefit the citizens of the states, and should be supported equally by all citizens, not just by insurers," said Pantos.
He also said that other states, notably Georgia, are beginning to look at assessing stop-loss insurance carriers to pay for deficits.
April 1, 2005
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