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States encroach on self-insured employers; a dozen states are thinking about levying--or have already done so--a tax on stop-loss clauses to fund high-risk pools, and that's unfair.

Since the Self-Insurance Institute of America was fanned in 1981, our mission has been to protect and promote the ability of U.S. employers to self-insure corporate risk and employee benefits exposure with the least amount of government intervention.

Federal protection of self-insurance by ERISA has served the industry well and continues to do so. The Act allows employers to provide benefit programs without the need to comply with 50 different sets of state laws and regulations. However, today we face the greatest threat to self-insurance as states attempt to treat stop-loss insurance (a critical component for most employers to be able to self-insure) as health insurance in making assessments to shore up their failed high-risk health pools.

SIIA is working to counter this trend that so far has resulted in stop-loss assessment programs being adopted or considered by at least 12 states. We believe state legislatures and regulatory agencies are sidestepping self-insurance's protections under ERISA by making these unfair and--in our opinion--unlawful assessments. Assessments are typically being made to help finance deficits in states' high-risk insurance programs or failed small group reforms undertaken by state governments. SIIA believes that those pro grams should be supported equitably by each state's citizens rather than by an unfairly selected industry group. Neither stop-loss nor traditional health group insurers should be hailing out these failed programs. To do so is to place a penalty on those who are, in fact, keeping people out of state risk pools by providing a wide range of benefits. This is nothing more than double taxation on the employer community.

Assessments on stop-loss carriers will result in more costly coverage for employers and their employees--a burden which could lead to reduced benefits, greater cost sharing with employees, changes in plan design and restructuring of co-payments for health care services, as well as possible higher retention levels by employers that could jeopardize the financial integrity of the plan. It may also force people who lose coverage to seek protection in the states' high-risk pools. That would be the very opposite of what the states intend with their assessments.

Our members who face the prospect of state assessments on stop-loss insurance can take heart from this summer's ruling by the Minnesota Supreme Court that denied state collection of premium-based assessments.

This ruling supports SIIA's position that stop-loss insurance is not health insurance, as it does not directly pay for any health care treatment or reimbursement to any plan participant.

Self-insured employers are committed to providing health coverage to employees and their dependents. Rising health benefit costs are a major concern of businesses as they strive to stay competitive. We recognize that reform of the high-risk pool programs around the country is warranted, but we strongly object to states shifting the tax burden for these programs to the businesses that are struggling to provide their own employees with health care coverage. Shifting the tax burden to employers who self-insure their benefit programs is not reform--it is a huge step in the direction of higher health plan costs and more uninsured people.

James A. Kinder is CEO of the Self-Insurance Institute of America, a membership based not-for-profit association. Information about SIIA is available at
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Title Annotation:point/counterpoint
Author:Kinder, James A.
Publication:Risk & Insurance
Date:Dec 1, 2003
Previous Article:TPAs.
Next Article:States have a duty to protect the insured: despite recent court decisions, states have been aggressive in protecting consumers from fraud and abuse.

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