Friday, February 10, 2012

Will self-funded plans have to offer contraception?

I have a really basic question about the just-announced compromise regarding insurance coverage for contraception -- so basic that this post should have a shelf life of about ten minutes. But I really wonder.  Under the compromise,
  • The new regulation will require insurance companies to cover contraception if the non-exempted religious organization chooses not to. Under the policy:
  • Religious organizations will not have to provide contraceptive coverage or refer their employees to organizations that provide contraception.
  • Religious organizations will not be required to subsidize the cost of contraception.
  • Contraception coverage will be offered to women by their employers’ insurance companies directly, with no role for religious employers who oppose contraception.
  • Insurance companies will be required to provide contraception coverage to these women free of charge.
Question: more than half of Americans who get their health coverage from their employers are in self-funded plans -- that is, plans in which the employer sets aside funds to cover the cost of health care, usually hiring a third party administrator to handle the claims process, as well as a stop-loss insurer to cover costs above a certain level.  So: who will "provide contraception coverage" in self-funded plans?   If it's the self-funded entity, then the employer is paying for it. Would the TPA somehow absorb the cost -- or a stop-loss insurer under some special rider? If so, surely either would find a way to pass the cost back?

Will someone please render this post unnecessary?

UPDATE 2/14: At Business Insurance, Jerry Geisel relays this clarification-to-come notice:
In regulations issued Friday [Feb. 10], the administration said it will develop a comparable rule that would apply to employers affiliated with religious organizations that self-fund their health care plans.

“The departments intend to develop policies to achieve the same goals for self-insured group health plans sponsored by nonexempted, nonprofit religious organizations with religious objections to contraceptive coverage” according to regulations released by the Internal Revenue Service and the Departments of Labor and Health and Human Services.

For now, “I see a gaping hole” on the self-insurance issue, said Andy Anderson, a partner with Morgan, Lewis & Bockius L.L.P. in Chicago.
 UPDATE 2/15:  NPR's Jim Zarroli cites an industry expert who assumes that for self-funded plans, "the insurance company" footing the bill would be the TPA:

One industry official who didn't want to be named said it's clear contraceptive services save money over time or are at least cost neutral. But he's worried about the White House compromise, anyway. He says insurance companies will be forced to put out a lot of money up front without getting reimbursed and that sets a dangerous precedent.

Insurance industry consultant Robert Laszewski says the problem is complicated by the fact that most employers and virtually all big companies self-insure. They pay their employees health care costs out of pocket every year. The insurance company is paid just to administer the plan. And it typically passes on its costs to the employers. Only in this case, it won't be able to do that.

"The problem is the insurance plan is going to have to front about $360 per person who uses the birth control pill," he says. "And the insurance company that does that will not be able to recoup any savings."

This creates an almost unprecedented problem, according to Laszewski. Federal and state governments frequently order private companies to do things like put airbags in cars, he says. But those companies can charge more to make up the cost.

"I have never seen an example of the federal government telling a company they have to provide a service and they are not allowed to charge for it," he says.

Insurance companies that administer these plans will have no choice but to try to find a way to pass on the immediate costs to their other customers, he says, even if no one wants to admit that's happening. White House officials insist they can prevent that.

They also say the fact that the compromise has been embraced by some former critics, such as Catholic Charities and the Catholic Health Association, suggests it can succeed in the long run even if some details still have to be worked out.

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