38 August 2014 | The Self-Insurer © Self-Insurers’ Publishing Corp. All rights reserved.

During a season of legislative discontent, SIIA’s government relations team and a growing corps of activist members have nimbly defended, state by state, against the kind of threatened laws that could harm the self-insurance industry.

Issues of tax assessments on self-insured health plans, limitations on stop-loss insurance and tightening down on self-insured workers’ compensation groups are viewed as previews of possible coming attractions in many additional states.

“State-level legislative issues have become as important for SIIA to address as those at the federal level,” said Horace Garfield, vice president of Transamerica Employee Benefits and chairman of SIIA’s Government Relations Committee. “This is because stop-loss insurance and other factors affecting self-insurance are regulated by the states. Under the ACA, states are looking for ways to protect their healthcare insurance exchanges and they appear not to like anything that’s better for employees than joining an exchange.”

Front-burner legislative issues in six states and the District of Columbia have kept SIIA members busy with legislative testimony, visits to capitals for high-level lobbying and grassroots contact with legislators in their home offices, all coordinated by SIIA’s government relations office in Washington, DC.

Following is a tour of state legislative battlegrounds focusing on grassroots advocacy by SIIA members:

with the Help of its Members by Dave Kirby

This was the most vigorously

contested session resulting in a major

victory for self-insurers as two bills

failed to gain traction. One measure

would have created the highest stop-

loss attachment points in the nation

(SB 479) and another (SB 21) sought

to levy a tax on self-insured plans.

SIIA members rallying to oppose

the Connecticut measures included

Brooks Goodison and Dave Follansbee of TPA Diversified Group.

Also spreading the word to clients and

others in the self-insurance industry

were SIIA members Charlie Barger of

Pequot Health Service, Mike Kemp of

IHC Risk Solutions and Robert Melilloof Guardian Life Insurance Company.

Government Relations UPDATE

© Self-Insurers’ Publishing Corp. All rights reserved. The Self-Insurer | August 2014 39

Diversified was instrumental in directly lobbying the Connecticut legislature, including direct testimony and contact with individual members. Goodison, President of Diversified, was encouraged by reactions of several key senators who appeared to lean away from supporting the tax assessment bill.

Goodison said, “We are no longer afraid to engage our customers and their brokers as well as other stakeholders to make sure that our message is heard by the legislature. Mike Ferguson and Adam Brackemyre of SIIA help us with context to tell the story at the grassroots level.”

The taxation bill was opposed in testimony to the Appropriations Committee hearing by SIIA director of state government relations Adam Brackemyre who said, “We believe that the drafters of the legislation have not fully considered that the provisions, if enacted, would likely be preempted by the federal Employee Retirement Income Security Act (ERISA). Under ERISA, self-funded plans are federal, not state, entities. Therefore, they cannot be considered to be Connecticut entities of ‘domestic’ insurance carriers.”

Mike Kemp, president of IHC Risk Solutions, sought to rally support for SIIA’s legislative positions from IHC clients and the broker community. “We sent out blast emails to all the employers and TPAs we work with, suggesting they reach out to their representatives on these issues,” he said. “I think legislators hope to keep these kinds of issues under the radar, so our clients need to be part of the process rather than just letting laws pass and then paying the bill.”

A “good news” bill in New York (S. 6917) would protect the ability of organizations with 51-100 employees to purchase stop-loss insurance beginning in 2016 when the definition of “small

groups” changes to 2-100 employees under the ACA. Current NY law restricts the sale of stop-loss insurance to employers in the small group market. This bill provides a legislative fix and SIIA has worked with many stakeholders to advance the legislation.

The bill, described as protecting into the future the current stop-loss market among smaller businesses, was passed by the New York Senate but the companion bill A.9980 was not approved by the lower house Insurance Committee prior to adjournment. With the bill essentially in a “halftime” pause before the Assembly resumes next year, SIIA continues to seek support for the law among SIIA members and New York employers.

SIIA held a special mid-July briefing for New York members to underline the importance of grassroots support when the stop-loss bill is revived. The meeting in New York City was sponsored by Guardian Life Insurance Company, East Coast Underwriters, D.W. Van Dyke & Co., Meritain Health, AmWins, Berkley Accident & Health, Relph Benefit Advisors, HCC Life Insurance Company, Pareto Captive Services, LLC, IHC Risk Solutions, Gerber Life Insurance and Sun Life Financial.

Concerted grassroots action by SIIA members was spurred by a comment repeatedly attributed to Assembly members to the effect that they weren’t hearing enough support for the legislation from their constituents. Also, it was reported that the Department of Financial Services wanted to give the bills further study – which could mean assessing whether the bill could damage prospects of the state’s health care exchange.

Bob Relph, CEO of Relph Benefit Advisors in Fairport, NY, believes that the employer groups most likely to be affected will express their support for the bills. “After many years of being community-rated under New

York regulations, groups know the value and self-determination that self-insurance brings,” he said. “We have communicated the importance of this issue to employer groups and they have been very responsive in their support.

“However,” he cautioned, “the affected group is not a huge portion of the state’s employers so we’ll continue to carry the ball to help the Assembly members and the governor know that this is good for the state and a large population of employees.”

Mike Hirsch, vice president-sales of East Coast Underwriters, also believes that sufficient grassroots support for the stop-loss preservation bill can be elicited. “Absolutely, we have reached out to our brokers and, through them, to employers using the template letter that SIIA provided. And now we have time to make another push on this.” He points out that supporters of the bill have a new opportunity to convince legislators of its merits during the run-up to the next Assembly session.

SIIA member Lawley Benefits Group of Buffalo, NY, with offices throughout in New York and New Jersey, was an early activist in the cause of S. 6917. Bob Madden, benefit producer in charge of Lawley’s medical captive program, said, “A lot of employers are trying to keep their businesses afloat while health care reform and restrictions on stop-loss insurance are raising their concerns about being able to take good care of their employees. A law like this would help us provide employers with good options into the future.” Lawley has been contacting its clients asking them to contact their New York Assembly representatives with messages of support for the bills that would preserve their ability to buy stop-loss insurance.

A bill (B20-0797) that would effectively prohibit the sale of stop-loss policies to groups of 50 and under and

40 August 2014 | The Self-Insurer © Self-Insurers’ Publishing Corp. All rights reserved.

© Self-Insurers’ Publishing Corp. All rights reserved. The Self-Insurer | August 2014 41

require high individual and aggregate attachment points is now under consideration. Representatives of SIIA and members Aetna and Guardian Life testified against the bill’s stop-loss provisions during a recent hearing.

Committee chair Vincent Orange appeared to be drawn to SIIA’s arguments against the stop-loss provisions when he read portions of its written testimony. Chairman Orange asked DISB leaders present at the meeting, who support the bill, to consider points of testimony that include predictions that the stop-loss provisions would make self-funding more expensive for smaller employers and that the number of uninsured people in DC would likely rise if the bill were passed.

Joseph P. DeCresce of Guardian Life wrote to committee chair Orange, stressing that “Self-funding allows an employer to pay directly for the costs of employees’ health services. With stop-loss coverage, businesses can avoid catastrophic financial losses... A ban on stop-loss insurance will chill the business climate in the District, creating an incentive for employers to relocate outside of the District.” The issue is now on hold during the Council’s two-month recess.

Earlier, the DC Council approved a broad insurance tax assessment bill to support the District’s health insurance exchange, but it is not yet clear whether the assessment will include medical stop-loss insurance. SIIA has indications that some government figures do not favor including stop-loss, and consultation continues among industry and regulatory parties.

SIIA CEO Mike Ferguson’s letter to DC Health Benefit Exchange Authority Executive Director Mila Kofman expressed concern about the possibility of stop-loss insurers being included for assessment. “As you know, stop-loss insurance is neither sold on or off the

health exchange, nor considered to be a qualified health plan under DC law so assessing such carriers would be contrary to the existing statutory framework.”

Oregon Two bills were enacted, one bringing good news to stop-loss insurance buyers and

one with not such good news for self-insured workers’ compensation groups (SIGs). HB 4050 repealed the prohibition of stop-loss purchase by small employers.

Oregon was one of the few states prohibiting stop-loss availability to certain businesses in the small group market. SIIA supported this bill by providing information to legislators and briefing the chairs of the House and Senate committees.

The other bill (SB 1558) could have a longstanding effect on SIGs. It requires employer members to vote whether to maintain the group’s certification or be merged into the Oregon Workers Benefit Fund. Under the measure, SIGs must conduct a one-time vote to decide whether to continue operating, with a simple majority prevailing. Perhaps more important, the law gives the Oregon Department of Consumer and Business Services the ability to increase pool solvency standards and reserve requirements.

IllinoisApparently cleaning out “leftovers” from the 2013 session, the Illinois legislature

included SB 1873 on the docket this year. The bill proposed to increase regulatory standards on self-funded workers compensation groups (SIG) but its support among legislators appeared less than robust and it quietly succumbed in committee.

Tom Hebson, vice president of product development and government relations for Safety National, provider of excess workers’ compensation coverage, said the bill’s origins were unclear. “There has been some concern in the state after the failure of several underfunded groups about 10 years ago but SIGs have performed well recently and haven’t been anyone’s hot button issue,” he said.

SIIA members were on full alert to oppose the bill and a group of SIGs organized a lobbying effort, but the measure never received a hearing during this session.

MinnesotaThe Senate introduced SB 2483 that would have affected stop-loss insurance

attachment points and prohibit underwriting using individual health applications. The intent of the bill was not clear, especially because the individual minimum attachment point named was only $6,500.

With input from SIIA leaders including Horace Garfield of Transamerica, Jay Ritchie of HCC and Karin James of SunLife, SIIA staff initiated conversations with other insurance industry lobbyists. It’s difficult to determine a “cause and effect” process; however, the result was that the legislation was pulled but the industry was left in doubt about future avenues such legislature could take.

Legislators apparently looking for a tinkering project introduced SB 236 which would have transformed the current high risk pool assessment into a new clinical trials fund. On principle SIIA was poised to oppose the measure but the Kentucky House won that honor by failing to introduce a companion bill.