Hypothetical Mean

Commentary from an Actuarial and Economic Perspective

Posts Tagged ‘self-insured plans

Paying for Contraceptive Coverage: The Case of Self-Funded Employers

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Most Catholic institutions affected by the recent contraceptive ruling fund their own health benefit plans. This means that there is no “insurer” available to pass the cost of that coverage on to, even in a shell-game sort of way (see prior posts on large and small employers that purchase insurance).  When the Administration announced its compromise for the relatively insignificant fully-insured market, it didn’t offer any compromise for the much larger set of religious self-funded plans.  Instead, they announced an intention to figure out how to compromise:

The Departments intend to develop policies to achieve the same goals for self-insured group health plans sponsored by non-exempted, non-profit religious organizations with religious objections to contraceptive coverage.

In this past week’s Advanced Notice of Proposed Rule-Making (ANPRM), Health and Human Services (HHS) began the brainstorming process:

For such religious organizations that sponsor self-insured plans, the Departments intend to propose that a third-party administrator of the group health plan or some other independent entity assume this responsibility. The Departments  suggest multiple options for how contraceptive coverage in this circumstance could be arranged and financed in recognition of the variation in how such self-insured plans are structured and different religious organizations’ perspectives on what constitutes objectionable cooperation with the provision of contraceptive coverage.

These options (beginning on page 16,507) can be summarized as follows:

1) Use drug rebates;
2) Use fees paid by the religious organization nominally designated for another purpose, such as disease management fees;
3) Use funds from a private, non-profit entity to be specified later;
4) Receive a “reinsurance contribution” fund rebate or tax credit (this only “works” for 2014-2016);
5) Use the federal Office of Personnel Management designate a national, private insurer that would offer this stand-alone coverage;
6) Give the national plan a “credit” so they wouldn’t have to pay their entire Exchange fee bill;

This is an incredibly weak set of ideas.  These boil down into the following “pass the hot potato” funding sources:

a) The religious institution itself (ideas 1 and 2)
b) The third-party administrator itself out of profits (ideas 1 and 2)
c) The individual market via reduced reinsurance payments and/or the general US Treasury (idea 4)
d) An unspecified, wealthy benefactor (idea 3)
e) A benevolent, national, private insurer (idea 5)
f) Each of the individual Exchanges through reduced user fees (idea 6)

The administration is between a rock and a hard place here.  It is worth working through the mechanics of each of the above ideas, however, to illustrate the full breadth of the problem.

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Written by Victor

March 24, 2012 at 3:47 pm