Wheels within wheels


Starting in 2014, most Americans will be required to have medical coverage. Under the law, health insurers cannot deny coverage or charge higher prices to people who are sick. But stop-loss insurance, for catastrophic claims, is not regulated as health insurance. Stop-loss carriers often require employers to identify employees who have been treated for certain expensive conditions, including H.I.V. or AIDS, cancer, diabetes, obesity, sickle-cell anemia, heart attack, stroke and complications of pregnancy. The carriers may limit or deny coverage for those conditions or those individuals. The New Jersey Department of Banking and Insurance found that “some writers of stop-loss policies have been selectively marketing coverage to small employers on the basis of the health history” of employees, and “denying coverage to employers based on employee health status.” The agency described this as cherry-picking and said it constituted “an unfair trade practice.” In an interview, Dave Jones, the California insurance commissioner, said, “We see a disturbing increase in the marketing of stop-loss insurance to small employers with healthy employees.” Michael W. Ferguson, the chief operating officer of the Self-Insurance Institute of America, a trade group for companies in the self-insurance marketplace, said, “We don’t think there is a problem.” He denied that his members were trying to dodge insurance mandates or exploiting loopholes. The new law reduces the risks of self-insurance. Previously, self-insured companies would have struggled to switch to the insured market if employees developed costly illnesses. Under the law, companies can switch with no penalty, as insurers generally “must accept every employer and individual” who applies for coverage.

Very clever. Small companies can self-insure and get stop-loss policies for catastrophic problems — and stop-loss is not regulated as health insurance. Wheels within wheels. This is what you get when “comprehensive” legislation is written by 25 year olds who know nothing about the real world. All of which means: expect more distractions!

One Response to “Wheels within wheels”

  1. MarkD Says:

    You cannot get something for nothing. It is obvious that somebody must lose – provider, insurance company, or insured – in a zero sum game. It’s obvious to me that the insured is going to lose twice, by paying more for less.

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