Don’t Place Curbs on ‘Stop-Loss’ Insurance, GOP Lawmakers Tell Administration

Three Republican senators have warned the Obama administration not to place new limits on the issuance of “stop-loss” insurance, which employers purchase in order to operate self-insured health plans.

A recent Federal Register notice issued by the Departments of Labor, Treasury, and Health and Human Services suggests that the agencies “may be considering actions to limit stop-loss coverage for small and medium plans, which would be outside the limits of the administration’s existing authority,” the senators said in a letter to the heads of the departments.

The senators are Olympia J. Snowe of Maine, Michael B. Enzi of Wyoming, and Tom Coburn of Oklahoma.

Underlying the apparent clash between the senators and the Obama administration is a difference of opinion over how much power employers should have to escape requirements of the health law through self-insurance.

“Placing limits on stop-loss coverage could force businesses to switch from more flexible self-insured plans into more regulated plans subject to the multitude of new mandates” included in the health care law, the June 15 letter said. Rather than leading to better health care, “this could ultimately result in businesses dropping health insurance for employees as costs become prohibitively expensive,” the senators said.

They added that “we are concerned by federal government actions that may threaten the ability of small businesses to conduct their affairs, provide for their employees, grow and create jobs.”

The May 1 Register notice issued by the departments asked the public for information on “stop-loss coverage with low attachment points.” The Obama administration is concerned that this type of coverage may not be much different than regular insurance but wouldn’t have to meet all the requirements of the health law.