Politics
Phyllis Borzi. Getty Images Phyllis Borzi. Getty Images  

Republicans suspect administration of trying to block self-funded insurance

Photo of Patrick Howley
Patrick Howley
Political Reporter

Republicans on Capitol Hill say the Obama administration is trying to regulate or prevent small companies from providing self-funded insurance for their employees because self-funded insurance plans could be the “Achilles heel” for Obamacare implementation.

The majority of U.S. employers now offer self-funded insurance plans, in which companies finance employee health plans from their own funds. Many of the companies purchase stop-loss insurance plans from insurance providers. These companies would therefore avoid many Obamacare regulations when the law takes full effect in 2014. The practice of self-funded insurance, which was outright banned in early drafts of Obamacare, represents the “Achilles heel” for Obamacare implementation, according to insiders.

Phyllis Borzi, the Obama administration’s assistant secretary for employee benefits security in the Department of Labor, is a well-known opponent of stop-loss insurance and is suspected of making behind-the-scenes moves to prevent small companies from providing it, according to Washington insiders. The Department of Health and Human Services is capable of implementing new regulations on self-funded insurance on a federal level.

“We are not secretly writing [a] stop-loss regulation that we’re going to put in some underground pipeline to [the Office of Management and Budget] and spring it on the community. None of that is happening,” Borzi said at a December 2012 Employee Benefits Research Institute policy forum.

But the New York Times reported in February, “The Obama administration is investigating the use of stop-loss insurance by employers with healthier employees, and officials said they were considering regulations to discourage small and midsize employers from using such arrangements to circumvent the new health care law.”

The Center for American Progress, a progressive think tank headed by former Bill Clinton Chief of Staff John Podesta, released a June 19 report  entitled “The Threat of Self-Insured Plans Among Small Businesses,” which outlined ways that Democrats could legislatively fight against stop-loss insurance on a state level, further raising Republican fears.

Republican lawmakers were concerned enough to write a letter to top Cabinet members officials requesting information on the administration’s policy on stop-loss insurance.

“We have not gotten a response to the letter yet,” Brian Newell, House Education and the Workforce Committee staffer, told The Daily Caller.