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This already happens in some states, and the Affordable Care Act has given companies extra incentive to self-insure, or pay employee claims themselves instead of purchasing an off-the-shelf product from an insurer.
Self-insured plans are immune to the health law’s taxes, benefit requirements, profit limits and other rules, and increasingly smaller companies are eyeing the option as a means to sidestep the law.
Winners and losers
Only large employer and individual health plans sold or renewed starting Jan. 1, 2016, are subject to SB57’s autism coverage mandate.
Once signed by the governor, the new law would require plans to cover 600 hours of behavioral therapy annually for children between the ages of 2 and 9, with families picking up co-payments and deductibles. Coverage would also include pharmaceuticals, psychiatric and psychological treatment, occupational and speech therapy and medical treatments.
Small businesses and self-insured companies are exempt — the exception being the state of Utah, including schools and colleges.
Another bill, HB88, will pick up some of the slack, making Utah’s autism “lottery” permanent. Lawmakers approved the $2 million measure, which will provide ABA therapy to about 270 autistic children through a lottery run by Utah’s Medicaid program. HB88 also adds autism benefits to the Public Employee Health Plan, which covers many city and county employees.
Following is a breakdown of insured Utahns who fall under the umbrella of SB57 — and those who don’t.
470,910 Large group policyholders
157,707 Individual policyholders
90,000 State employees
No mandated coverage
782,236 Residents covered by self-insured policies
192,955 Small group policyholders
244,724 Medicaid enrollees
37,700 Children’s Health Insurance Program (CHIP) enrollees
Source: Utah Health Insurance Market Report, 2012
"We are seeing small and mid-sized companies want to investigate self-funding who likely would not have prior to the ACA," said Utah insurance broker Ernie Sweat.
Some have a lot of younger and healthier employees who are disadvantaged by new insurance pricing rules and want to avoid "rate shock," or soaring prices, he said.
A shield for small businesses » It was once almost unheard of for small companies with fewer than 50 employees to bear the risk of covering unexpectedly high claims. To protect themselves, businesses can buy reinsurance, or stop-loss coverage, which kicks in to pay claims in excess of a certain amount, say $20,000 or $30,000.
Nationally, stop-loss limits have fallen in response to demand by smaller companies.
In Utah, though, it’s not easy finding reinsurers willing to work with companies with fewer than 50 employees, said Sweat. "We work with a handful who will go down to 25 and one that will go down as low as 10."
Also, Utah benefits from lower-than-average insurance rates, and Sweat isn’t as convinced as some in his industry that autism coverage will cause them to markedly rise.
Data from states with autism mandates shows the per member, per month cost of providing autism services was 15 cents the first year and 31 cents the second year, with greater usage due to increased awareness, according to the national advocacy group, Autism Speaks.
In Utah, believed to have some of the highest rates of autism in the country, the stakes are higher — making SB57 all the more necessary or risky, depending on your point of view.
Self-insured companies may wait for any fallout before making health plan changes.
SB57 allows insurers to withdraw autism benefits if, after 12 months, they can show it caused a 1 percent rise in premiums, or more.
The measure also allows insurers to review patients’ treatment plans to ensure the care is working.
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